Originally published in the May 2017 American Association of State Compensation Insurance Funds (AASCIF) Newsletter
Transportation-related incidents continue to be the leading cause of fatal workers’ compensation injuries. So the buzz about autonomous vehicles has caught the attention of the industry. The hope is that by automating certain functions of vehicles, human error can be eliminated and safety improved.
There are different levels of automation, ranging from low levels of driver assistance, such as cruise control, to partial automation, where humans cede control under certain condition, to fully autonomous, self-driving vehicles. Although there are companies currently piloting self-driving vehicles, experts say we are still years away from fully autonomous vehicles. However, partial automation is being developed rapidly and is likely a short-term reality due to increased investment in research from the National Highway Traffic Safety Administration (NHTSA), auto manufacturers, and individual states.
Although the possibility of improving safety is exciting, those in the workers’ compensation world need to be thoughtful about how the changes in innovation will affect how they do business in both the short and long term. Specifically from an underwriting perspective, considerations will have to be made about evaluating the risk of transportation companies in an ever- changing technology landscape.
One of the first questions on everyone’s mind is “how do we know when autonomous vehicles are safe enough to become mainstream?” Companies have been testing and retesting concept vehicles, but the real difficulty is anticipating every situation a vehicle may encounter. Arda Kurt, research scientist for the Center of Automotive Research at The Ohio State University, explained that “the real challenge is figuring out how to program the vehicle for the unexpected situation.” Developing an autonomous vehicle to travel on a highway is something technology can handle, but when you throw in unexpected obstacles such as an animal or road construction, that is where testing still needs to be done. He also explained that research is still being conducted on how consumer usage will affect injuries. “When people don’t have to actually be driving, they may position themselves differently in the car. We are still researching how to mitigate risk if people are slouching to one side,” he said.
As these developments continue, underwriting departments are going to have to determine how they are going to assess the risk associated with employers using autonomous vehicles. It is still unclear how underwriters will determine which automated components actually lead to fewer accidents, or how to evaluate employer safety protocols to ensure the vehicles are being used as intended. As the technology for automation continues, the underwriting strategy will have to follow closely behind to ensure risks are adequately accounted for.
Another topic of discussion has to do with liability. There are many questions about liability if an autonomous vehicle crashes. Currently, a human is still required to pay attention in a car, but there will surely be questions about product liability when crashes occur. A publication titled Self-Driving Cars and Insurance by the Insurance Information Institute (III) explained that insurers will have to determine “whether the accidents that do occur lead to a higher percentage of product liability claims, as claimants blame the manufacturer or supplier for what went wrong rather than their own behavior.” It also mentions the possible need for liability laws to evolve to account for these situations.
Although autonomous vehicles should not affect claim compensability, insurers will have to consider how to address subrogation for workers’ compensation claims occurring in autonomous vehicles. If liability laws change to encourage the use of autonomous vehicles, workers’ compensation carriers will have to stay engaged and advocate for their right to recover claims costs caused by a third party. And if laws are passed that do not allow recovery, underwriting and risk control departments will be tasked to find ways to reduce the risk associated with these types of claims.
Perhaps the biggest question that remains for underwriters is how technological innovation will change the transportation industry and the occupations therein. Today, there are millions of truck drivers on the roads, delivering the products we consume. Currently their jobs are pretty straightforward; they pick up freight in one location, drive to the destination, and unload the freight. Their occupation, and the risk associated with it is somewhat defined. However, we may be on the cusp of technology that could radically change what the truck driver occupation looks like. Companies are beginning to experiment with “platooning,” where two tractor trailers follow each other closely to approve fuel efficiency. This arrangement is possible because technology allows the vehicles to talk to each other, so the second truck knows when to change speed or break. Currently, a truck driver is required to be present in both vehicles, but some are predicting that it is only a matter of time until the second vehicle is driverless.
If platooning becomes an industry standard in transportation, many questions about occupational hazards will have to be addressed. Will manual classification need to evolve to address drivers who are not actually driving? Will truck drivers’ salaries change and if so, how will that affect payroll and premiums for the transportation industry? And what are the unintended risks that may creep in as occupations change?
Just like most changes, there are many questions that we don’t have the answers to. And that’s ok. Right now it is just important that we stay alert and prepare for the rapid changes ahead.
Be sure to join the Underwriting Committee at the AASCIF Annual Conference for A Changing Workforce: Technology & Automation to hear about what changes other industries are experiencing.
Kurt, Arda. “Autonomous Vehicles.” Personal interview. 10 Feb. 2016. Center of Automotive Research at The Ohio State University