Driverless Cars and Insurance: Bob Hermes’ Q&A with Business Insurance Magazine

February 9, 2017 - Within a matter of just a few years, driverless cars have gone from science fiction to reality. Companies have begun to experiment with these autonomous automobiles in various markets. In fact, Singapore has the distinction of being the first city where commuters can flag down a self-driving taxi.

However, while the idea of sitting back and reading your smartphone as your car ushers you to your destination might seem like a dream come true, it has consequences that could be a nightmare for certain industries, including auto manufactures and the insurance industry.

For example, in the U.S., manufacturers are ‘strictly liable’ for defective products that cause harm to the purchaser or others while being used as intended. Because driverless cars are intended to operate collision-free, one or more of the cars involved in a collision could be considered defective.

For the insurance industry, fewer drivers will need automobile liability insurance since driverless cars could virtually eliminate driver negligence. This will move premium dollars away from these insurance offerings. However, product liability exposure for car manufacturers will increase, since manufacturers will be on the hook for accidents. So we could see manufacturers purchasing increased or additional coverage.

Partner Robert N. Hermes, who serves as the Co-Chair of the Reinsurance Litigation and Arbitration Practice Group, recently participated in an interview with Insurance Business magazine on the topic of driverless cars. The Q&A covered a number of issues of concern for auto manufacturers and insurers, including the aforementioned shift in liability as well as issues pertaining to hacking. The article, which is titled “Driverless Cars Will Lead to Greater Product Liability,” published in January.

To read the full article, click here.