Thinking about the rules of the road for a time when autonomous vehicles dominate the landscape is probably like envisioning a horseless carriage on the plains of the Old West.
But that won’t stop Bob Passmore, senior director of personal lines for the Property Casualty Insurers Association of America, from trying.
Passmore has become an authority on self-driving cars as a necessity of his role with PCI, and he’s seeing states start to step up and formulate plans to roll out rules and regulations to deal with driverless vehicles.
He talked about these things, as well as how the future of driving will impact the insurance industry with Insurance Journal.
This interview has been edited for clarity and brevity.
Insurance Journal: Can you talk about the status of autonomous vehicle regulations right now, and where they’re headed, from a national perspective?
Passmore: There’s lot of activity going on right now. We’ve seen that it’s really increased in this current legislative session, but right now, 14 states have something in place that provides for some basic regulatory framework, for either testing or operations of autonomous vehicles on the roads.
A couple of the states are abiding an executive order, like the governor has issued a proclamation, and then the transportation regulators put together some regulations, but other states have passed some very basic legislation, maybe making some adjustments to the motor vehicle law to how somebody might apply for a license from the (Department of Motor Vehicles).
There’s legislation pending in about 25 states, a couple of states have just added to that list of newly passed laws. In New York, as part of the budget bill, they passed something that allows testing on the roads, and then there are bills headed to the governor in Georgia and I think Colorado, as well, that set some very basic regulatory framework up.
A lot of the stuff is going to be dealt with on the transportation regulator, whoever that…It could be the (Department of Transportation), it could be the DMV, whatever they call it in your particular state. States are just starting to dip their toes into this, and those discussions are ongoing.
IJ: You mentioned some states in there, how about any particular states where maybe they’re ahead of the curve, so to speak? I know California likes to say it’s out in front. I know Nevada had some sort of regulations that it was forming, at least for testing autonomous vehicles. Are there any states out there in front on this, and what are they doing?
Passmore: That’s the focus of lot of the activity here is states are trying to be perceived as getting out in front of this because they want to attract the activity to their states. Everybody wants to see this testing of these vehicles done for economic reasons.
If you’re talking about networks of vehicles, there’re transportation benefits for people who aren’t able to drive on their own. There’re certainly a lot of potential benefits out there for those type of constituents, too. There’re a lot of reasons why lots of states want to get out in front of this, but the states that have the most detailed activity are probably, as you said, California.
The laws that they passed a couple of years ago were very basic, and along the lines of what you see in some of the other states, the regulatory proceeding has been ongoing for a couple of years, and those are highly detailed and there’s a lot of discussion around those things there.
Some other states are taking a much different approach. They’re passing a law with some basic regulatory framework. I guess the real crux of some of the policy argument here is, what sort of regulatory framework do you put in place that doesn’t restrict the technology, until you want to do things like protect safety, you want to do things like make sure that the state knows who’s testing vehicles where and when, so people don’t get surprised by those things.
IJ: What does the political landscape for these regulations look like? Are there bipartisan efforts to draft regulations for self‑driving vehicles, or these regulations likely to get caught up in partisan battles?
Passmore: When I looked at some of the hearings, they had some informational hearings in Congress, the interest in the issue has been bipartisan. I think that the concerns about making sure that you address safety properly, making sure that the technology is able to reach its full potential, are bipartisan issues.
You tend to see more of the concerns about safety raised. You see it equally there.
I’ll answer it this way. I haven’t seen a lot of partisanship on this particular issue. There’s quite a bit of uncertainty about where to go with all of this, and mostly what I see is the policymakers trying to learn as much as they can about this, and making their concerns known so that they can foster good discussion on it.
I haven’t seen a big partisan divide on the issue yet. You’d naturally see, some attitudes or regulations would be different from one party to the other, but you see the same concerns on both sides of the aisle.
IJ: How will these regulations impact the insurance industry?
Passmore: I think insurers are right now very much in “learn about this” mode, “learn everything that they can” mode. You’re talking about changing the nature of the driving risk, so that’s going to be a very significant change for the auto insurance industry.
I think it’s pretty widely agreed that this technology could mean a pretty significant reduction in the number of accidents, but the complexity of those accidents are going to change, both in severity because the damage to the vehicle itself, it’s so much more sophisticated.
Even the vehicles coming on the road today are much more sophisticated than the ones just a couple of years ago, so when they get damaged in accidents, they’re much more expensive to repair, they’re much more complicated to repair.
You’re talking about doing things like scanning the vehicle to make sure its systems are all working. It’s not necessarily the damage you can see as you inspect it or as you take it apart, so even the repairs get more complicated.
It also gets more complicated from a liability standpoint, because it’s no longer what I said and you said, as drivers of the two vehicles, it becomes, “What did the car do?” Right now, there’s an accident, you talk to the drivers, you get a statement from them to find out what they did and when they did it, when they saw the other car.
Now, you’re going to have to find out from the vehicle itself what the story is. You can’t sit there and ask a car questions, the only way you can do that is to get access to the data that the car keeps track of about how it was operated and information that it acted on.
IJ: How are insurers preparing for all of this?
Passmore: Insurers get information about what options they have on vehicles, how they work, how they impact safety, so they can rate and underwrite for them appropriately, and develop products as we go along. That’s going to be a key factor.
A lot of people think that there actually could be a short‑term increase in the number of accidents, as manual drivers, and traditional drivers get used to how the automated drivers drive, because they probably will respond a little bit differently than a human driver would, because they don’t have some of the same motivations at play that some of us do.
They won’t get distracted, they won’t be thinking about, “I’m late for my appointment,” those things won’t necessarily be in play. The way you might anticipate another driver reacting in traffic, might be different than an automated vehicle, so you could see a number of accidents happening, just from that. Insurers will be in need to be able to adapt to those things.
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