On May 23, the House Financial Services Committee held a hearing on the impact of autonomous vehicles (AVs) on the future of insurance. In light of the Senate’s American Vision for Safer Transportation through Advancement of Revolutionary Technologies Act (AV START Act), this hearing brings another critical perspective on AVs.
For cities, the hearing yielded two crucial takeaways on the issue’s policy future.
First, data access is not guaranteed in the AV START Act by the car owner or even the insurer, yet insurers are required by law to price by risk, making is critical to insurance companies. Second, the insurance sector expects shifts in how cars are insured and new risk models in order to evolve with AV technology.
Chairman Sean Duffy (R-WI) presided over a panel of witnesses who are directly involved in the growth of AV technology and its impacts on insurance. The panel was made up of David Carlson, a US Manufacturing and Automotive Practice Leader at Marsh and McLennan, Ryan Gammelgard, Counsel to the Public Policy Resource Group at State Farm, Sam Geraci, the Vice President of Strategy for American Family Mutual Insurance Company, Ian Adams, Assistant Vice President at the R Street Institute and Jack Gillis from the Consumer Federation of America. The panel was teed up to answer important questions about the safe and effective rollout of AVs, and what this new technology might change.
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Panel members expressed that data — in particular, crash data — will be necessary in order to do their jobs and provide an accurate risk-based assessment of the vehicles for their policies. Ryan Gammelgard spoke of the importance of data for the insurance industry, for “by law [they] match price to risk” and if they are not given access to the data they “might not be able to do so.”
Ian Adams echoed this concern, stating that “insurers will need to be able to access data related to autonomous vehicle operation if they hope to create products that meaningfully reflect risk.” Gammelgard added that while data “is critical for liability determinations,” it is also “important [to the public] in determining the safety and reliability of technology.”
Sam Geraci also noted that “regulated review and validation of rates and coverage requires insurers to provide state insurance regulators with extensive levels of actuarially valid data on crashes [and] their frequency and severity,” a task that might prove impossible without access to the crash data in AVs. Geraci continued that there has been widespread data collection on human drivers and their accidents, and it should be the same for AVs now.
The data that insurers want is just the crash data, and would “not include private data or confidential business [proprietary] data,” Geraci said.
Currently in the AV START Act, there is no requirement that data of any kind from AVs will be shared, even for crash data. Jack Gillis pointed out that in the AV START Act — which would expand testing in order to get the technology into commercial use more quickly — “accident data is not being made available to the public, including insurers.”
Without such data, the insurers will be “left to guess [at the levels of risk] or rely on the companies’ safety claims” added Gillis. Gammelgard noted that “any attempt to include data access provisions [has been] met with great resistance.” Gillis went on to say that it could be the role of the federal government to “ensure that crash data is made publicly available.”
Both Geraci and Gammelgard were supportive of the Inhofe amendment to the AV START Act that would create a Data Access Coalition to set up recommendations for a potential future data access structure. However, it would take two years to make recommendations even while AVs would continue to be put on the roads.
Representative Brad Sherman (D-CA) asked the panel what steps are taken to assess the safety of AVs before they are put on the road since they are “not required to submit safety assessment letters to the National Highway Traffic Safety Administration,” to which Geraci answered that the “[data is needed] to understand safety performance.” Rep. Sherman seemed open to the idea of the federal government having a role in ensuring that data, saying that “maybe Congress ought to help with requirements that you get that data.”
The second major takeaway from the hearing centered on the shifting landscape of the insurance market itself in response to AVs entering and taking over the automotive scene. Gammelgard said that higher and higher levels of automation on the road “will necessitate changes in the types of policies offered” by insurance companies, particularly as vehicle ownership shifts from the individual to corporate level. David Carlson said that as the technologies advance, the “liability pendulum will shift from personal auto to commercial product liability.”
This means that companies will likely buy insurance policies on a fleet basis. Carlson said that “fleet coverages are likely to become admitted coverages subject to greater underwriting and rating security.” Such a shift from personal to commercial insurance begs the question of what individuals will do to protect themselves from risk. Some such as Gammelgard see personal mobility coverage rising – policies that “insure the person on every step of their day.”
As the hearing showed, AVs stand to revolutionize the transportation industry and the insurance guidelines for it. This technology could bring mobility to those who are traditionally restricted, such as the older Americans and those who have disabilities.
The experts at the hearing showed that part of a responsible rollout would address data sharing from AVs, and specifically, continuing to make safety data available to the public and insurance companies so that they can make accurate risk-based assessments. Congress still could include a more certain answer on data access in the AV START Act, and cities along with the insurance industry should be watching what this means for the future of our roads.
About the Author: Brittney Kohler is the program director for transportation and infrastructure at the National League of Cities.
Nathan Levi is an undergraduate student at Union College York who joined NLC’s Federal Advocacy team as an intern working on Transportation and Infrastructure in April.