Self-driving cars are just one example of technology outpacing regulation. Insurance Bureau of Canada’s Ryan Stein explains why insurers should be more proactive with new technologies.
highlights
- A survey by the Insurance Bureau of Canada (IBC) found that most people consider self-driving cars to be safer than traditional cars.
- Insurers should play an active role in engaging governments and regulators as new technologies such as self-driving cars become more prevalent.
- As regulators, insurers and governments seek to update laws to adapt to new technologies and trends, their guiding principle should be to ensure injured parties have access to prompt and fair compensation
Self-driving cars and what happens when regulation lags behind technology, with Ryan Stein
Welcome back to the Accenture Insurance Influencers Podcast, where we ask some of the industry’s leading thinkers what the future of insurance looks like. How could artificial intelligence (AI), innovation and anti-fraud technology transform the industry? Our first guest is Ryan Stein, General Manager of Auto Insurance Policy and Innovation at Insurance Bureau of Canada (IBC).
So far in this series, Ryan has spoken about how self-driving cars pose a challenge to today’s auto insurance regulations and why IBC recommends a single insurance policy that covers both conventional and automated vehicles. In this episode, we look at the adoption of automated vehicles and general principles as insurers, governments and regulators try to keep up with the new technologies.
The following transcript has been edited for length and clarity.
If you look at the research, automated vehicles are much safer than human drivers. At the same time, many people feel uneasy about the idea of robots behind the wheel. So what does the introduction of automated vehicles look like in the future?
An IBC survey looked at the general population and most people said they were not interested in driving an automated vehicle. But if you look at people aged 18 to 34, most are. And overall, most people find these vehicles safer.
Even if you hear from people who are hesitant to use this technology, I think the potential for automated vehicles is enormous. They will eventually make up the bulk of new car sales – I don’t know how many decades that will be, but there is no doubt that automated vehicles are on the rise and will be on our roads. This is why it is so important to ensure that motor vehicle insurance laws are updated so that insurance companies can offer the appropriate coverage for these vehicles.
And we believe that the only insurance policy – that offers protection regardless of whether the human or technology caused the accident – is the way to go. And that this is the most appropriate way to achieve what we believe is an important goal, which is to ensure that injured people have access to fair and prompt compensation.
I imagine this poses a particular challenge in North America, where, to begin with, there is a patchwork of provincial or state laws governing auto insurance, and automated vehicles in particular. To what extent is a national strategy for legislation and regulation important in this area?
If you could get all the provinces to update their insurance laws at the same time that would be awesome. This would mean that all Canadians, if they use or buy automated vehicles, can purchase appropriate insurance.
While it would be great if all of this could happen at once, insurance just doesn’t work that way. Usually a province makes a change, similar to what happened with the sharing economy. Ontario and Alberta did it first, adjusting their laws to allow for ridesharing. And it could be the same for automated vehicles. If some provinces are willing to update their laws to accommodate vehicle automation, they should move. And then when the others are ready, they can do the same.
To what extent should insurers play a more proactive role? Should they lead this public policy and inform the ordinance and sit at this table when these laws are enacted?
The insurance industry has been quite proactive. It was the member companies of the IBC that said, “We have to deal with this problem.” And that led to the development of the single policy idea and the various features that supported it, the data sharing agreement and everything that went into the paper led that we released last year.
The industry has presented the ideas in this paper to government regulators across the country and made it clear to the various governments that we want to work with them on this matter. And the response from the provinces we met with was quite positive.
That’s great. IBC focuses on the Canadian market, but Canada is not the only country addressing the issue of automated vehicles. So what general principles should regulators, insurers, and governments consider when trying to update laws to accommodate automated vehicles?
I think the most important thing – and that’s what we’ve really focused on – is that it’s important to make sure that injured people have access to fast and fair compensation. That is why car insurance is regulated.
As we worked with our members and studied how automated vehicles would work under existing motor insurance law and regulation, we saw the risk of people not getting fair and quick compensation – and getting stuck in costly and lengthy liability disputes .
After realizing the importance of people having access to fair and quick compensation, we asked ourselves: How can we update insurance laws to achieve this? We looked at models that would work in a situation where conventional vehicles and automated vehicles share the road, because you need an insurance solution that works for both.
And that is exactly what individual insurance enables. It ensures people have access to fair and quick compensation and can co-exist with existing car insurance for conventional vehicles.
Automated vehicles and autonomous vehicles are an example of a technology that is evolving faster than the regulatory environment. What can insurers do in these cases to ensure they stay on top of things while not investing in what may just be hype and not reality?
From a public policy perspective, it’s about involving the government and regulators and talking about these issues. Discuss the importance of studying insurance laws and regulations and making sure they are appropriate. At IBC we try to achieve this, but companies can also do this individually.
We spent a lot of time talking about the individual insurance policy and the data sharing part. Importantly, though, it’s less about those two solutions and more about governments and regulators looking into this issue and reviewing insurance laws to ensure they’re appropriate in a world of automated vehicles.
We think that the solution we have put on the table is really good. But before we even get there, we want to have these detailed discussions with the governments that deal with insurance laws, and if that comes up with a better solution, we’re excited to see it. But we really want to have this discussion where the insurance industry, provincial governments and regulators review insurance laws and make sure they are appropriate in a world of automated vehicles.
Great. And probably a good strategy if we look at other innovations that are also making inroads into our society. And people can download your work from the site, right?
You can. It is available on our website .
Perfect. And thank you for taking the time to speak to us. That was a really interesting conversation.
It was my pleasure.
Summary
In this episode of the Accenture Insurance Influencers Podcast, we talked about:
- The IBC survey found that people generally find self-driving cars to be safer than traditional cars.
- Why it’s important for insurers to proactively work with governments and regulators on issues like self-driving cars to ensure the insurance policy is equipped to deal with real-world risks.
- Guiding principles for adapting laws to new technologies and trends – namely that injured parties must have access to fair and prompt compensation.
More notes on self-driving cars:
That concludes our interviews with Ryan Stein. If you enjoyed this series, check out our next guest. Futurist and fintech entrepreneur Lex Sokolin spoke to us about how technology and digitization are disrupting the status quo in financial services. We also talked about artificial intelligence (AI) – how it differs from automation, how it can transform the insurance value chain and why AI bias is so insidious.
What to do next:
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