Lloyd's: Insurers have role to play in developing new technology

The insurance industry will have a vital role to play in the rise of autonomous and unmanned vehicles, according to a new report from Lloyd’s.

Lloyd’s said that the complicated risk profile of the technology and the potential for large losses means that insurers will have to be involved in regulatory negotiations and the development of new and existing produces if the technology is to become commercially viable.

“Because potential losses may be high, a commercial market for autonomous and unmanned technology is unlikely to evolve unless insurance is available,” Lloyd’s wrote. “Autonomous and unmanned vehicles are a big unknown in many ways, and by careful scrutiny and mitigation of new risks, insurers can assist in the groundwork for adequate regulation.”

Lloyd’s said that autonomous technology in cars is one area where it could have a major impact on the frequency of claims.

“Autonomous cars could potentially lead to a substantial reduction in motor insurance claims if accidents significantly reduce in frequency,” Lloyd’s wrote. “Lower claims would be expected to result in lower premiums, and tighter profit margins. Some might argue that if cars really do become crashless, there may not even be a need for motor insurance.”

“However, some element of risk would be retained by the owner of a car,” it added.

However, Lloyd’s did warn that the issue of who was liable in the event of a claim for a collision involving an autonomous vehicle could be an area for confusion and debate.

Another area that Lloyd’s said will be developed to accommodate the new technology is cyber insurance.

Lloyd’s said that while cyber policies do not currently cover bodily injury and physical damage, the possibility of a cyber attack on an autonomous or unmanned vehicle would make this coverage a necessary inclusion.