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Dec. 18, 2019

Insuring Autonomy: How Auto Insurance Can Adapt to Changing Risks of Autonomous Vehicles

Autonomous vehicles – or “AVs” – are a growing presence on American roadways, and with them come several significant policy questions and challenges. It will be important to address an ever-increasing AV world in a comprehensive manner that spurs innovation, increases public safety, provides peace of mind, and protects American drivers and consumers. Travelers believe that the auto insurance industry should – and will – play a critical role, as lawmakers, regulators, and society understand the new AV world. This white paper outlines Travelers’ perspective and recommendations on these important public policy issues.

Travelers believe that AVs ultimately will benefit society by reducing the number of accidents, injuries, and lives lost. As people transition to using AVs, Travelers supports all measures that help ensure the safety of our roadways for individuals and property. However, there are significant uncertainties associated with AVs. For example, how long will it take to transition from our current state to a fully AV world? How long will it take for the anticipated benefits of AVs to be fully realized? What unintended consequences and disruptions will arise during the long transition?

When it comes to insuring AVs, Travelers believes that leveraging the existing automobile insurance structure, both commercial and personal, is the best method for compensating crash victims quickly and efficiently – now and in the future. The current insurance structure is already designed to adapt to evolving risk environments and would minimize regulatory uncertainty, market disruptions, and consumer confusion.

Continuing to rely on auto insurance for coverage – regardless of vehicle type – will also help to ensure consistency during the long period in which AVs and driver-operated vehicles share the road. And regardless of whether a vehicle is autonomous or driver-operated, auto insurance offers vehicle owners the most peace of mind when it comes to common concerns such as weather or theft.

To ensure that auto insurance continues to be the primary compensation method, any proposed legal and regulatory framework governing the use of AVs must include provisions specifically related to auto insurance. This means that vehicle owners should be required to purchase and maintain adequate insurance for their AV, whether it is a personal, ride-share, or company-owned vehicle. And, coverage limits should be high enough to account for more expensive technology in AVs.

The insurance industry also should play a central role in AV policymaking and stakeholder discussions. Local, state, and federal lawmakers and regulators must coordinate – and seek input from all relevant stakeholders – to ensure a consistent, rational regulatory framework that addresses all potential issues. Travelers would support the development of a model state law relating to AV insurance that builds on the current state-based regulatory and oversight structure for auto insurance.

As a longtime leader and innovator in both commercial and personal auto insurance, Travelers is well-positioned to contribute to these discussions. We support – and are ready to help create – a nongovernment stakeholder coalition to make recommendations on insurance-related AV issues. Insurers also have extensive consumer communication programs and can help facilitate education on AV safety.

To this end, the following pages of this paper address:

  1. The current state of the AV market, projections for future development and early policy responses.
  2. How auto insurance can meet society’s needs in an AV world.
  3. Specific insurance-related recommendations for an AV legal and regulatory structure

White Paper

About the National Association of Insurance Commissioners

As part of our state-based system of insurance regulation in the United States, the National Association of Insurance Commissioners (NAIC) provides expertise, data, and analysis for insurance commissioners to effectively regulate the industry and protect consumers. The U.S. standard-setting organization is governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer reviews, and coordinate regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally.