The prospect of self-driving (automated) vehicles is exciting but this new technology cannot work with our current CTP schemes.
All owners must have CTP insurance to register their vehicles to drive on Australian roads. Each state or territory has its own CTP scheme but they differ in the coverage provided, nature of fault and amount of premium paid. Schemes also vary as to whether they are publicly or privately managed.
While there are already different CTP schemes in each state and territory, it will become increasingly complex to have traditional and automated vehicles on the roads together. The era of self-driving vehicles will probably demand a new Australia-wide approach to CTP insurance.
This article is based on Austroads Research Report, Registration, Licensing and Insurance Issues Associated with Automated Vehicles, March 2017.
Levels of automation
We currently refer loosely to self-driving vehicles, automated vehicles or AVs. But there are officially six levels of automation and level 2 – driver assistance - is already quite common.
|Levels||Automation ||Description |
|0||None||Driver in full control|
|1|| Driver assistance||Driver assisted with steering or acceleration/ deceleration|
|2||Partial||Driver assisted with steering and acceleration/ deceleration|
|3||Conditional||Vehicle drives but can ask for driver to intervene|
|4||High||Vehicle drives even if driver fails to intervene|
|5||Full||Vehicle takes over all tasks from human driver|
Levels 3 to 5 demand a new approach to CTP insurance because the vehicle, not the driver, is almost completely responsible for the driving task.
Road laws are currently based on the principle a human is in control of a vehicle. Generally, there needs to be at least one hand on the steering wheel for effective control.
If there is no human in control of the car, who has proper control? If there is an accident, the CTP insurer needs to know if the vehicle or the driver had full or partial control at the time and how much. At Levels 3-5, the vehicle is the driver.
Where a human is usually liable for an accident (unless it is blameless), who will be liable for an AV? This potentially puts responsibility on the manufacturer of the vehicle to create 100% safe products. While some manufacturers may welcome the opportunity to be more innovative and safety conscious, they may be less willing to face the risk or expense in creating such a vehicle.
In the case of Level 3 AVs (conditional automation), insurers must know who was in control of the vehicle at the time of an incident. This will put a higher burden of proof on all CTP schemes. Government and industry might also need to decide the occasions when someone is or is not required to be engaged in driving.
Getting the data
How will insurers get the information they need? One way is through the use of event data recorders (EDRs), which can continuously collect data about who and what is driving the vehicle in real time.
EDRs come with their own challenges, including privacy, where data are stored and how data are shared and with whom. Manufacturers will have to disclose in a manual how their EDRs will be used, for example:
- to help determine fault in the case of malfunction, accident or incident
- whether and when an automated mode was functioning and what occurred in a crash, near miss, or traffic violation
- the need to preserve data for later access
- privacy matters to establish liability
- in a form courts can use.
While fault will be crucial, Australian states and territories treat fault differently. No-fault schemes (Vic, Tas, NT) provide cover regardless of who is responsible, but insurers must still recover against the entity liable for damage. Fault-based schemes (Qld, NSW, ACT, WA, SA) still vary in the level of cover and blameless cover.
Insurers will need to find a way of sharing data from AVs to determine fault. It is possible that increasing the quality of data available will help reduce CTP fraud, as well as bring down premiums for motorists who are known to drive safely.
Premiums might fall generally for highly automated vehicles because they are considered relatively safer than human operated ones. There might also be fewer vehicles on the road because of a drop in personal ownership, or more competition among insurers in the new market.
Even so, insurers need solid actuarial evidence before they can consider adjusting risk rating factors.
Will AVs reduce premiums?
It is too early to say whether AVs are safe, even though many experts are making extravagant claims about saving lives and reducing injuries.
In fact, there could initially be more serious injuries because of catastrophic failures of AV systems. There could be more claims for serious and minor injuries in people who would otherwise have died in an accident. Meanwhile, the long-term trend in psychological injuries could continue with AVs because of system failure or cyber-risk.
CTP insurance is not likely to become cheaper until there is proof that AVs save lives and reduce all types of injuries on the road.
New CTP ideas for AVs
This is just a selection of ideas from the Austroads report.
First party - Currently, CTP insurance is “third party” insurance, which means your insurer has to claim against a third party in the accident. But a first party scheme may work better because you would simply resolve the matter with your own insurer. There would be less inconvenience to other drivers and injured third parties.
Risk assessment - Insurers will need to assess risk differently. The usual driver characteristics used in NSW, such as age, crash history or address, will not apply. Insurers will have to assess the AV technology itself to decide on the level of risk and may even introduce new forms of insurance.
For example, the UK plans to extend compulsory insurance requirements to cover product liability for automated cars. Insurers may even introduce software or cyber-attack insurance for vehicle owners.
Registration conditions – Conditions for registration will become more complex for AVs, with different levels of automation and recurring software updates. For example, would AVs be allowed to operate in automatic mode on all roads, or only on certain designated highways?
The shift in vehicle ownership from private to fleet, such as on-demand and rideshare services, could create the need for new vehicle classes.
NIIS - AustRoads suggests the current National Injury Insurance Scheme (NIIS) model, now operating across all states and territories, could be extended to accidents involving self-driving vehicles. It suggests the creation of national benchmarks for minor and moderate injury levels to work in both private and publicly operated schemes.
The authorities involved in CTP insurance, registration and licensing are still in the process of discussion and analysis of what changes might need to be made for self-driving vehicles. The crucial CTP considerations for AVs are:
- Fairness of different levels of cover across different jurisdictions for the same crash and injury
- Agreement on who will pay for injury caused on public roads
- Common agreement on who or what is in control of the vehicle at the time.
The situation is complex and it will not be a clear road ahead.