Insuring driverless car accidents in Australia

Self-driving cars are expected to significantly improve road safety, by reducing or eliminating the 94 per cent of serious road accidents that are caused by human error or dangerous human choices. Even so, accidents will still happen, for example accidents caused by deficiencies in automated driving technologies. Indeed, this causal factor is likely to increase as these technologies assume greater responsibility for driving tasks.

So, how will people who are injured in an accident caused by a self-driving vehicle obtain compensation? Will Australia’s existing motor accident insurance arrangements respond to personal injury claims in the same way they presently do for human driven crashes?

And who should ultimately fund the insurance pool that pays this compensation? Should the funding burden continue to fall on owners of motor vehicles via compulsory third party insurance premiums, or should the burden shift to vehicle manufacturers and others involved in the design, manufacture, operation and maintenance of automated driving systems?

These questions are currently being considered by Australia’s Transport Ministers. This article sets out my views on how Australian Governments might approach these matters.

Existing motor accident injury insurance arrangements

Every Australian state and territory has laws requiring motor vehicles to have insurance that provides compensation for personal injury or death arising from motor vehicle accidents, in order to be registered to drive on public roads. Insurance for property damage, however, is not compulsory.

These laws modify or extinguish common law rights to claim damages in an action for negligence to varying degrees:

• Queensland, Western Australia, South Australia and the Australian Capital Territory have fault based, common law schemes with various levels of modification
• New South Wales, Victoria and Tasmania have hybrid schemes where access to common law damages is available to differing degrees
• Only the Northern Territory operates a scheme that is completely no-fault

The National Injury Insurance Scheme provides treatment, care and support to people who sustain serious or catastrophic lifetime injuries in motor vehicle accidents, regardless of fault. All states and territories have introduced laws to implement the scheme. Recipients of common law compensation in respect of their care and support needs are ineligible under this national scheme.

There is considerable uncertainty as to whether these schemes will provide compensation for injuries arising from accidents caused by an automated driving system. And although injured people who are not eligible to access compensation under these schemes may be able to claim compensation via alternative causes of action such as negligence, product liability laws and contract, they will face delays and greater upfront expense in obtaining compensation via these mechanisms.

No person should be worse off

The Heads of Australia’s Motor Accident Injury Schemes have suggested that “no person should be worse off, financially or procedurally, if they are injured by a vehicle whose automated driving system (ADS)  was engaged, than if they were injured by a vehicle controlled by a human driver”. As an overarching principle, this is unobjectionable. But there are multiple ways of achieving this overarching principle, and other objectives that should be considered in determining the best solution. 

A preordained solution?

In November 2016, Australia’s Transport Ministers resolved that 

• state and territory governments should undertake a review of compulsory third-party and national injury insurance schemes to identify any eligibility barriers to accessing these schemes by occupants of an automated vehicle or those involved in a crash with an automated vehicle; and
• subject to the review of insurance schemes, each state and territory government amends its compulsory third-party insurance schemes in close consultation with each other and industry; and that resulting reforms are nationally consistent wherever possible.

The problem with this resolution is that it defined the scope of the review too narrowly. The resolution seems to assume the solution is to amend the existing motor accident insurance schemes to remove any eligibility barriers, and that the review should therefore focus on identifying those barriers.

Who should pay?

There is a fundamental problem with this assumed solution. The existing schemes are funded via premiums paid by vehicle owners - usually the primary driver of the vehicle. This was appropriate when the schemes were designed to cover the legal liability of human drivers to people who suffer injury as a result of their driving.

If the existing schemes are simply amended to remove eligibility barriers to people who suffer an injury due to a deficiency in a vehicle’s automated driving system, they will end up covering not only the legal liability of at fault human drivers, but also the liability of wrongdoers who have failed to take appropriate steps to ensure the ADS is safe and fit for its purpose. 

If the schemes are going to cover the risk of the ADS being deficient, then the cost of doing so should be borne by those who can best control this risk, i.e. those involved in the design, manufacture, installation, maintenance and operation of the ADS.

Other solutions

There are other solutions that meet the ‘no worse off’ principle, and also distribute the funding burden more fairly and efficiently. These include:

• expanding the existing motor accident injury schemes to cover injuries caused by an ADS, but also creating a reinsurance pool funded by parties who could be responsible for a deficient ADS
• establishing a new purpose-build automated vehicle scheme that mirrors the existing motor accident injury insurance schemes in terms of accessing compensation, treatment, care and other support, but that is funded by parties who could be responsible for a deficient ADS
• establishing agreed minimum benchmarks in terms of eligibility, coverage and benefits for personal injuries caused by a deficient ADS, that could be implemented by each state and territory in different ways, to suit the circumstances of the relevant state or territory (similar to how the National Injury Insurance Scheme is implemented), and is funded by parties who could be responsible for a deficient ADS.

These other solutions are not without their own difficulties. For example, determining the respective premium contributions of the various parties that could be responsible for a deficient ADS will be complex, particularly initially when the risks associated with each party are not well understood. Also, the history of the motor accident injury insurance schemes in our states and territories suggests that it will be too difficult for all states and territories to reach agreement on option 2, and that option 3 may be a more feasible way of achieving a degree of uniformity for injured persons, vehicle owners and the ADS industry. But option 3 risks offending the no worse off principle, if the minimum benchmarks for AV crashes differ from those applying to human driven crashes. 

These alternative solutions need to be further explored. Australia’s National Transport Commission (NTC), which is now leading the review that was to have been conducted by each state and territory, is considering these and other options. However, it was the NTC that recommended the 2016 resolution to the Transport Ministers, and the NTC’s current preferred solution remains to amend the existing motor accident injury insurance schemes to ensure they respond to AV crashes, without changing how these schemes are funded. But I’m hopeful that the public submissions that the NTC receives on this issue will lead it to a better and more equitable solution 

Want to learn more?

Here’s a link to the NTC’s website, where you can download a copy of its discussion paper on motor accident injury insurance and automated vehicles. Submissions can be made via the NTC website until 12 December 2018.