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Driverless cars could cut motor insurance premiums, says transport minister

The emergence of driverless cars onto UK roads could cut the cost of motor insurance premiums, a government minister has said.25 Oct 2017

John Hayes, transport minister in England, highlighted the potential savings for owners of driverless cars in a parliamentary session in which proposed new legislation to encourage growth in the development and commercialisation of driverless cars was discussed by MPs. The Automated and Electric Vehicles Bill was introduced before the UK parliament last week.

"My guess is that initially, as the marketplace develops and new products emerge, prices will be much as they are now; but that as the record becomes established and insurers’ calculations about the likelihood of claims are affected by the greater safety provided by autonomous vehicles, prices may well fall," Hayes said.

The minister qualified his comments by stating that the pricing of motor insurance policies for driverless cars would be "a matter for insurers" and was "not something that the government can stipulate, dictate or even, with any certainty, predict".

However, Hayes referred to comments made by David Williams, chief commercial underwriter at AXA who has predicted "substantially reduced premiums" in future as a result of driverless cars "making our roads safer" and reducing "the costs of claims".

Hayes said: "It seems to me that if the ​safety of autonomous vehicles means fewer accidents, insurers will find that out. As they do so, the ability to insure a vehicle will grow and the price of doing so will fall. That is, as I say, a matter for the future and not for now."

According to the new Automated and Electric Vehicles Bill, insurers would generally be liable for damage stemming from an accident caused by an automated vehicle "when driving itself" where the vehicle is insured and "an insured person or any other person suffers damage as a result of the accident".

Where driverless cars are not insured, owners would be left liable for the damage stemming from accidents.

Insurers would be able to exclude or limit their liability for damage if insured individuals make "software alterations" that they are prohibited to make under their insurance policy, or if they do no install "safety-critical software updates" that they at least "ought reasonably to know" are "safety-critical".

Where insurers are liable to make payment for damages to those impacted by an accident, they would have a right to raise a claim against those responsible for the accident for recovery of the money they have paid out.

Hayes said insurers' rights to recover costs from "the liable party" under the Bill would apply under "common and product law".

"Automated vehicles, together with an effective insurance framework, as the government propose in the Bill, could deliver significant financial and safety benefits for road users," the minister said.