Summary
In our latest episode of the ‘Let’s Talk Motor’ podcast series, Partner, Paul Ryman-Tubb and Partner, Emerson Wallwork look at the evolution and where we are in relation to automated vehicles.
Transcript
Paul Ryman-Tubb: Well, hello, everybody! I'm Paul Ryman-Tubb, a Partner at Weightmans, and today we are going to talk about the evolution and where we are in relation to automated vehicles. It's a subject that has been around now for a number of years in fact, I can't remember how many years ago it is now that the ADI started the automated driving insurer group I was part of that and still am part of that and that must be best part of 10 years ago now I think, so it's certainly a subject that's been around a while and there's no one better to join me to talk about this today than my colleague and fellow Partner, Emerson Wallwork so, hi Emerson.
Emerson Wallwork: Hi Paul thanks, thanks very much for the introduction.
Paul Ryman-Tubb: You've been involved in this subject for a while, haven't you?
Emerson Wallwork: Yeah, not quite as long as 10 years, but it isn't far off. In 2015 we could see that that this was coming on the horizon and we set up Weightmans Motor Technology Group, but I look back and just to remind myself as to where we were and the government published its pathway to driverless cars consultation just over 7 years ago and the other thing that caught my eye when I just reminded myself of what was being said then, was that envisaged level 4, so hands off, eyes off driving by 2021 and we're not even at level 3 now, so that's hands off conditional automation where the driver is able to take back control. That still hasn't been introduced in the UK and which is, which shows the bumps in the road that there have been.
Paul Ryman-Tubb: Yeah, indeed, It's certainly a complicated subject. I think there's quite a bit of misinformation out there. People talk about driverless cars, cars without, you know, steering wheels and that sort of stuff in the same breath as assisted vehicles. But, not that long ago, a couple of months ago now there was a lot of stuff in the press relating to Ford's Blue Cruise System, is this not a driverless system? I’ve seen pictures of people without the hands on the steering wheel, is this not a driverless system? Maybe a level 4 system?
Emerson Wallwork: Absolutely not. It's in fact, it's a level 2 system. So that's a continuous assistance system. So, it controls longitudinal and lateral movements. So, it'll control the throttle and the brakes, and it will control the steering. The principal difference and where Ford, stole a march some would say in their marketing, is that what it does, it has a driver facing camera but that driver facing camera has, for the first time in a vehicle that's been offered in the UK is connected to the driver assistance systems. So, on motorways, you can take your hands off the wheel which anyone who's got a level 2 lane keep assist car will know you can't do you keep having to check in, and it can be a little bit irritating.
Paul Ryman-Tubb: Yeah, indeed. I know my own car shouts at me if it doesn't think I'm putting enough steering input into it, that's true. So, the camera system, that's monitoring that the driver is looking at the road is that what that's doing?
Emerson Wallwork: It is. My understanding, I think you've actually seen a demonstration of it, but my understanding is that if you take your eyes off the road for longer than 5 seconds, then you will get a prompt, so it will switch back to what the traditional level 2 cars have and requiring you to then put a steering input in and show that you're concentrating.
Paul Ryman-Tubb: Yeah. So I guess that is reinforcing the point that with the level 2 system, and we'll come back to this in a little while, legally speaking, the driver is still responsible, he remains responsible at all times and has to monitor what's going on you can't completely switch off is that correct?
Emerson Wallwork: That's absolutely right. So, it's quite a sophisticated system and you will be able to proceed down the M6 and with the with the car, and some would say lulling you into a false sense of security but yes, you are required to monitor the environments around you, and you are required to be able to act at any time. I think it's probably worth highlighting that in terms of what that vehicle has got on it in particular in the terms of that hardware it isn't that sophisticated and if you look at it compared to a Mercedes S Class or an EQS for instance, that has a phenomenal amount of kit on it. So it has 2 radars, it has a stereo camera, it has 360 degree cameras on the wing mirrors, and it has a LIDAR system, whereas the Ford doesn't have anything like that amount of tech but it isn't all about the hardware it's about how the vehicle interacts with you and it's about how the software picks up the issues and is able to translate towards a seamless driving experience, if you will.
Paul Ryman-Tubb: Indeed and as I understand it the ford has been approved in the UK and in Europe and is I think I read, the first one in the UK to be approved where the driver is permitted to actually take his hands off.
Emerson Wallwork: It is, and that is because of the connection. It's not the first car that has a driver camera. The Mercedes that I've just mentioned has a driver camera, many other vehicles do, but it's the first time that it's being used in a way that it can monitor driver awareness which to an extent, it allows you to take your hands off the wheel and as you'll probably know, Paul, it does make driving on a motorway a lot more comfortable when you can drop your hands to your side rather than having to hold the steering wheel.
Paul Ryman-Tubb: Yeah, I guess that's right. You mentioned the M6, my experience of the M6 is normally stationary anyway. But, moving on, you can't have a conversation about automated vehicles it seems to me without mentioning Tesla and Tesla have been in this space for a while, and their cars are pretty sophisticated aren’t they, how do they compare with the Ford and the Mercedes that you mentioned?
Emerson Wallwork: That's a really interesting question and it proves that it isn't all about the hardware. If you take the Tesla model Y for instance , which is the smaller of the Tesla SUVs and that does without radar and lidar, but it recently secured the highest NCAP Safety score that's been awarded to date, an unbelievable 98%. So that shows that what they've learned from all of the testing that Tesla’s done, what they learn from, and the full self driving systems that they offer in the States and the AI that's surrounding that it is quite impressive as to what they can achieve from a vehicle in terms of its automation.
Paul Ryman-Tubb: Yeah, interesting, yeah thank you. The one landmark along this journey that we've both been on as we alluded to earlier was in 2018 when the Automated Electric Vehicles Act was introduced, that talks about automated vehicles in there but these vehicles as I understand it are not classified as automated vehicles within the Act. That's correct, isn't it?
Emerson Wallwork: They’re not. There isn't a vehicle that is yet listed as an automated vehicle and that is still a prerequisite within the Act. At the time that it was enacted the Automated and Electric Vehicles Act, it was assumed that it wasn't going to be until Level 4 that vehicles will be categorized as automated. That's looking very likely that it won't be the case, so when we get to a you know, a type approved level 3 vehicle that the government is content, it falls within and the definition of automated vehicles, then it will kick into place and the ALKS, which some of you may be aware of, so automated lane keeping and systems, which is has been introduced in Europe, so the Mercedes S Class is currently operating with what is an ALKS system and so it can travel you know in designated areas with the driver hands off, eyes off, and all they have to do is to be able to pick up control of the vehicle as to hand back, that's the point which it now appears that vehicles are going to be considered an automated vehicle within the definition of the Act and that’s not on the horizon that's in the very near future, because there are vehicles with that tech and there are vehicles operating at that level already in other jurisdictions
Paul Ryman-Tubb: So, thank you that's interesting and brings us on to think about then how the Act will affect insurers, because insurers covering those vehicles as that and other vehicles become quote an ‘automated vehicle’ in line with the Act, then the Act changes the world slightly doesn't it In terms of the way it makes insurers liable where the vehicle is driving itself, that’s quite a sea change isn’t it for insurers?
Emerson Wallwork: It is absolutely a sea change. I mean it makes it clear that if the vehicle isn’t insured and an accident was caused by an automated vehicle when it was driving itself, the insurer will be liable for any damage that may be caused by it.
Paul Ryman-Tubb: Yeah, that's interesting and also of course that includes liability to the driver so it seems to me that an insurer's exposure to injuries to possible passengers increases by one person in every single case.
Emerson Wallwork: In every single case it does, and at the only thing that it doesn't extend to is damage to the vehicle itself on the assumption that that will be first party covered but yes, you you're absolutely right, it does introduce a new claimant, if you will.
Paul Ryman-Tubb: Yes, it does indeed, and insurers will have a right of recovery from manufacturers, won't they, but I don't know yet, and I'll be interested in your views, how that might go in terms of seeking a recovery from a manufacturer having paid a claimant where the vehicles causes the accident.
Emerson Wallwork: Yeah, I think probably step back to one stage before then, there is a right of contribution against any other party that's liable, so this isn't a situation where an automated vehicle or insure will be picking up all liabilities arising out of an accident if another vehicle has caused or contributed then they will be able to pursue that and the Act gives them that right to it, but it also gives a specific right to pursue the manufacturer. However, fortunately people can't see me on this podcast but if you could, you could see I've been doing this job for many years and I have yet to bring a successful claim against a manufacturer for a vehicle defect and that's not because I haven't had cases where it's been a possibility it's more that it is an extremely difficult process, to go through, and that will only be more difficult when it comes to a vehicle automation, because there are a huge number of companies involved in the supply chain, there are huge challenges in establishing what has gone wrong, and perhaps we’ll probably cover this later as well, perhaps the most difficult thing of the lot is access to the data. The manufacturers have committed to give full access to the data as part of the UNECE regulations but, crucially it's not over the air access so it is not going to be straightforward to get to this.
Paul Ryman-Tubb: Yeah, I I'm totally with you. It's not going to be a straightforward claim is it against the manufacturer you can see lots of other parties involved and that is going to be difficult so words in the Act to find but actually doing it in practice like you, I can see that as being a difficult area. So just before we get back to the data, because like you I think that's an area worth touching on. Do you see this as a sea change, I mean, you know how quickly and how many of these vehicles are we talking about on the road, presumably it’s going to come in slowly, do you think?
Emerson Wallwork: I think you will come in slowly, and we're talking at the moment high end vehicles that are likely to be approved as level 3 or ALKS vehicles whichever you want to describe, It will be a gradual process, it'll continue to be an expensive option I think it's worthwhile pointing out that if you want to have Blue Cruise, which is a level 2 system on your Mustang Mach E that's £17.99 a month extra. Tesla don't currently offer full self driving in the UK but in the States, that's a $15,000 extra and you're paying $15,000 to basically share your data with Tesla so they're learning from it all the time so it seems quite a good deal for Tesla to me, but ultimately at this stage because it's on high end vehicles the manufacturers are able to market it as a significant benefit and therefore I think that will slow it down. People are quite cautious when it comes to this, a lot of people will immediately turn off all of these systems personally, I like using them, I know you do Paul but I'm I think we're probably still in the minority there.
Paul Ryman-Tubb: Yeah, I think that's right and that brings an interesting point to mind as well that, so if an insurer is covering a vehicle that is capable of having that system turned on how will that insurer know that that option is being activated? I’m not quite clear in my mind how that works, or maybe they won't know, maybe they'll just know that it's capable of doing it.
Emerson Wallwork: They'll be able to get to that information, but they won't be able to get to that information easily. The manufacturers have committed as part of the type approval process to make that data and available and insurers will be able to access that. But as I hinted at a few minutes ago it won't be over the air so it will be quite a difficult process to get to that and in a minor collision, you have to ask, will it be worthwhile seeking to gain say what your policy holder is said that they had the system activated at the point of impact, quite possibly not.
Paul Ryman-Tubb: Yeah, it's difficult, isn't it? One can imagine any driver who's done something daft and hit a claimant saying it wasn't me it was the car, honest, you know, and that is going to be a challenge for insurers. Seems to me there's two challenges, one is knowing or understanding whether or not, or how many of the vehicles that you're covering are using and have the option activated on them in the first place, and secondly, at the time of a collision, how do you know that it was driving itself? Which, A you're right, triggers the liability under the Act, but it seems to me it's a massive point if there's a claim from the driver because he cannot claim, can he if the vehicle is not in automated mode, whereas he can do, if it was?
Emerson Wallwork: Absolutely. That’s the point here. There’s an assumption that there won't be, this won't be much of an issue because we're dealing with very expensive vehicles, but what about in the fraud arena? A relatively new EV could be a very attractive means of getting a significant ‘income’ shall we put it from a fraudster’s perspective, if you've got a claim from the driver, all of the occupants and we know how much more difficult it is to repair an EV. On average, it's 14% longer in time terms and 25.5% more expensive according to Thatcham's recent catch-ily worded ‘Impact of the EV Adoption on Repairing Insurance Sectors Report.’ But, it's a very interesting report and it highlights a number of issues that I think is probably for a separate podcast around EVs, it could be a very attractive proposition for a fraudster who wants to put in an expensive credit higher claim, wants to put a claim in on behalf of the of the driver and if they have got wind of the fact that certain insurers aren't checking whether these vehicles are being used in automated mode then you're opening a door for them. So yes, it is a concern and it's something that really, that needs to be built into insurers processes.
Paul Ryman-Tubb: It is a concern, yeah I agree and I’m not quite sure what the solution to that is yet I know it gets mentioned, I also sit on the Parliamentary Advisory Committee for Transport Safety and this sort of thing crops up there too, Thatcham are represented on there as well, so that is an issue, access to the data, understanding who was driving at the time. But just a broader point really to touch on before we before we close around, this is safe for manual driving isn't it, I mean the whole idea of these systems is to make vehicles safer. What’s your view on that?
Emerson Wallwork: Yes, within reason. And what's probably caught my eye more than anything in the last 12 months around this, is that the regulation 157 the UNECE Regulation around this has lifted the speed limit for Alps from 50 kilometres an hour to 130. Now that's higher than our motorway maximum. So we are in essence, suggesting that a driver can switch off to a degree at significant speeds so that has to be a concern, but we're talking about in controlled environments. So that can only be the case when there is a central reservation so essentially, we're talking about motorway scenario. That is a concern, but I suppose my point here is that there's an assumption that you have to be an automated mode to get the benefits of all of these systems, that's not actually the case. I think we need to be aware that even if the automated systems aren't engaged, that ADAS offers a lot of benefits, so you have ‘the redundancy’, is the phrase that's generally used here means that there will be a significant safety net here and we are starting to see the benefits of some of that, and what caught my eye recently, when I was looking at the statistics around injuries on the roads in the UK, there's only been a 3% decrease in fatalities which I would say is quite a disappointing figure, the same across the killed and seriously injured sector that's down to 29, just under 30,000 now. But what caught my eye was that there's been an 11% drop in the overall injuries. Now that tends to suggest that we’re starting to see the effects of active safety systems, so automated emergency breaking in particular coming through. It's less able to deal with the most serious collisions, the reckless driving, and that kind of thing. But we all starting to see some clear signs of improvement around that.
Paul Ryman-Tubb: Yeah, 11% is a significant figure isn't it, It's a reduction and you can see that these vehicles are never going to prevent vehicles colliding or hitting pedestrians, and aside from anything else as you said earlier, it's going to slowly be introduced to the fleet anyway, I think there’s kind of 40 million vehicles on UK road so it's a lot of vehicles to get through in a lot of years, but there are clearly benefits I mean, I know that from my own vehicle, and I'm sure you do too, the vehicle seeing things coming from the side and spotting things sometimes before you do as a driver, so it does have massive benefits. It also seems to me that from an insurer perspective, means that there must be an improving third-party risk, even though some of that is eroded by the point you made earlier of the cost of repairs to these vehicles so, AD claim severity increases doesn't it with the more technology that needs to be repaired gets damaged, etc?
Emerson Wallwork: It does and it's not just the EV issues, the batteries that costing £30,000 of course is an issue but the cost of a front end repair even on the lower end of the car park is a concern and it's particularly note-worthy that last week there was a lot of press interest in the question of vehicles being stripped at the roadside for parts, so particularly bumpers sensors and headlights and that's as a combination of supply chain issues but more importantly, the value of these parts. So, a high-tech vehicle with a lot of ADAS systems on it is much, much more expensive now, in terms of front-end repairs than a vehicle a decade ago.
Paul Ryman-Tubb: Yeah, so lots for insurers to think about and just before we close then, just worth touching back on to electric vehicles, because these tend to get grouped in the same category don’t they. Well indeed the title of the app, the ‘Automated Electric Vehicles Act,’ they seem to be groups together, but electric vehicles themselves pose other issues and challenges and we've already started to see a bit of that haven't we, with issues that insurers have asked to advise on. This is perhaps something we can discuss on a future podcast Emerson.
Emerson Wallwork: I think it is something that we do need to discuss on a future podcast because there are common issues between what we've been talking (about) today and electric vehicles and a lot of the most sophisticated vehicles in terms of automated features and crash prevention features are electric, because that's where you get most buy in from the consumer but it's also the focus of the marketing as well, the tech around it. Last year there was well over 250,000 new battery electric vehicles registered so 16.5% of the market. So yes, it is a significant issue, but there are many challenges for it for insurers around that and I think it probably goes a little bit beyond the scope of today.
Paul Ryman-Tubb: Indeed, thank you very much. Well, I hope you found that interesting, useful food for thought, certainly a changing and evolving area. So thank you very much. Thanks, Emerson.
Emerson Wallwork: Thanks, Paul, and thank you everyone for listening.