Get ready for a world of autonomous technologies

For decades, the transportation segment has been a source of relentless innovation and technical advances. And in the years to come, technological innovation will do more than drive change in how people and goods move around. Increasingly, technology will be doing the driving for us.

Once the province of science fiction, self-driving, autonomous vehicles (AVs) are going to become more common on our streets and highways with each passing year. And they are only the most obvious manifestations of self-directed technologies in manufacturing, distribution and transportation certain to transform our daily lives in the decades to come.

Innovation in high gear

More autonomous vehicles — from personal cars to over-the-road trucks — will be merging onto highways across America in the years ahead. By one estimate, the number of autonomous vehicles traveling American highways will increase to about 4.5 million by 2035.¹ On a global basis, total investment in autonomous vehicle technology already exceeds $200 billion annually, a figure certain to increase as competition in the AV-manufacturing marketplace intensifies. Nations around the globe are investing in AV-friendly infrastructure that will facilitate production and adoption of AVs for everything from personal transportation to corporate fleets and freight haulers. The potential impacts on the distribution and logistics industry may create a domino effect that will be felt in every aspect of our daily lives.²

One line of research is a concept called Mobility-as-a-Service (MaaS), which will revolutionize access for those whose disabilities limit presently available mobility options, as well as individuals not interested in the costs and maintenance responsibilities of private vehicle ownership. In the future, we may see driverless fleets that can be summoned with a smartphone app, not unlike an Uber or Lyft ride today.³

Data in the fast lane

The tsunami of data and computing resources required to support a future heavily populated by AVs is likely to be astonishing. One prediction of note is that by 2030, each AV on the road will generate up to 10 terabytes of data per day, or one zettabyte across the global AV industry. By comparison, that’s about the same amount of data generated by the entire world’s internet traffic for the year 2016 … every day.⁴

Autonomous trucking will have significant impacts on manufacturing and distribution as well. One survey noted that 65% of U.S. manufacturers believe self-driving trucks will be mainstreamed within the next 10 years.⁵And once mainstreamed, 90% of U.S. manufacturers believe that fully autonomous trucks could potentially save up to 25% of their total trucking costs.⁶

Transportation is not the only segment of the global economy that will undergo continuing transformation thanks to autonomous technology. Self-directed machinery using artificial intelligence and machine learning to make independent decisions, avoid obstacles and respond to changing conditions will take on greater roles in manufacturing and distribution the world over, reducing costs, increasing productivity and enhancing worker safety.

Risks along for the ride

So, the benefits of autonomous technologies will be huge, but what about the risks? As with all new technologies, risk assessments and liability theories regarding who is responsible when things go wrong will evolve along with technological change. Who bears responsibility if property is damaged, or injuries occur, due to the use of autonomous technologies? Is it the hardware manufacturer or software designer, programmer or equipment owner? It is possible that claims of liability may be directed at all parties to see what “sticks?”

The expanding use of AVs will present a variety of risks:⁷

•        Complex driving conditions– AVs systems will have to make countless decisions every second to ensure a smooth, safe, predictable ride. However, changing weather and road conditions, such as ice or broken pavement, wildlife or disabled vehicles, may demand unexpected, split-second decisions that may challenge an AV’s decision-making capabilities.
•        Imperfect technology– No technology is immune to error, no matter how demonstrably safe it may be. AAA research found that in real-world driving, present-day vehicles already equipped with active driving assistance systems on average experienced some kind of issue every eight miles. On public roadways, nearly 73% of errors involved instances of lane departure or erratic lane position. 
•        Cyberattacks– Like the many vulnerabilities posed by the Internet of Things (IoT), potential threats to AVs from cyberattacks are real, from hacking vehicles while in operation or piggybacking malware on manufacturer updates. There is even a potential that ransomware criminals might be able to lock drivers out or otherwise disable vehicles until payments are made.
•        Fire danger – The adoption of electric vehicles is expanding daily, and it is likely that the world’s future AV fleet will be overwhelmingly electric. While vehicle battery fires have been rare so far, damaged lithium-ion (LI) batteries used in all-electric AVs can be combustible, potentially resulting in metal fires with temperatures over 3,600 degrees Fahrenheit that are difficult to extinguish.
•        False sense of security – While AVs may do an exceptional job of transporting passengers from point A to point B safely, there may be times when occupants will need to intervene in an unexpected, potentially dangerous situation. Describing private AVs as “driverless” when human intervention is still required may result in occupants paying less attention to the need to respond in hazardous situations.

Insurance autonomy

Some believe the potential gains in safety and reliability of future AVs may impact the amount of capacity the insurance industry needs to allocate for traditional auto insurance. However, manufacturers and users of autonomous technologies may experience increased need for these lines of coverage:

•        Commercial General Liability – Coverage for bodily injury/property damage, personal injury, and medical payments arising out of the use of autonomous technology
•        Technology Errors & Omissions – Coverage for financial loss to a client resulting from errors or omissions in the design and manufacture of autonomous technology hardware, software and services
•        Cyber Insurance – Coverage against loss due to cyberattacks and breaches, including malware, ransomware, etc.

Seeking solutions with a future focus

As an organization that welcomes innovations helping global society move forward, Zurich is closely monitoring the development of autonomous technology on our highways as well as in manufacturing, distribution and other industrial segments. In keeping with our own commitment to innovation, we are developing an insurance solution that will create a new liability framework responding to the needs of the autonomous technology segment. This new, unified solution will answer the General Liability, Technology Errors & Omissions and Cyber needs of autonomous technology hardware and software manufacturers and users under one program.

We are responding because we see a world in which autonomous technology will enhance safety and productivity, reduce the world’s carbon footprint, and deliver exciting, new opportunities to generations of bright, young people helping to bring on the future. Our goal is to contribute to that future by doing what we do best: exploring the risks, collaborating with customers and brokers to understand them, and creating solutions that help answer them.

For more information about Zurich’s developing approach to help manage the risks of autonomous technologies, contact me at: joe.mclean@zurichna.com.

References:
1. “The Dangers of Driverless Cars.” The National Law Review. 5 May 2021.
2. Yeruva, Vinod. “Autonomous Vehicles and Their Impact on the Economy.” Forbes. 14 February 2022.
3. Alexiou, Gus. “Mobility As A Service Concept Promises to Revolutionize Transport Accessibility.” Forbes. 23 May 2021.
4. Baumann, Florian. “Could Public Cloud Pose a Security Risk to Autonomous Vehicles?” Dell Technologies. 12 April 2021.
5. “Industrial Mobility: How autonomous vehicles can change manufacturing.” PWC/The Manufacturing Institute. February 2018.
6. Ibid.
7. “The Dangers of Driverless Cars.” The National Law Review. 5 May 2021.