Predicting the future: Kennedys and Zelichov on how the Autonomous Vehicle Industry can reach its full potential

This article first appeared in Policy Magazine, May 2019.

Autonomous vehicles (AVs) have been deliberated, trialled and tested for many years. Indeed, driverless technology is already used in many rail transport systems around the world. However, when it comes to the prospect of fully driverless road vehicles, the jury is still out.

For the AV industry to prosper, it is crucial that the right conditions prevail. Recognising the range of societal benefits, Governments around the world are considering the potential challenges and opportunities – which touch upon everything from infrastructure to legislative frameworks to consumer acceptance.  As risk profiles shift away from the people who drive the vehicles to those who build them, the AV revolution also raises significant insurance impacts.

Israel and the AV industry

Countries that foster and encourage innovation will inevitably be better placed to adopt AV technology than those that do not. It is therefore unsurprising that Israel, a country with a powerful start-up culture (including an estimated 600 automotive start-ups) is already a global leader in AV innovation.  With Waze and Mobileye among its most successful companies, Israel’s strength in the AV industry arises from its expert-focused technology sector.  Frequently, products originally conceived for Israel’s military (logistics, mapping and ranging technology) are shrewdly developed for use in everyday life, including for AVs.  

Indeed, Israel’s commitment to embrace innovation is one of the drivers enticing Kennedys, a global innovative law firm, to enter the Israeli market, with its recent association with Zelichov, Ben Dan & Co.

The future – changing use, ownership, and the role of Insurtech

Successful implementation of AVs is dependent on a number of factors. The technology and innovation itself is certainly key, but equally important is the cooperation of governments and various stakeholders – in particular insurers and manufacturers.

It is possible that with such cooperation, we will start to see fully automated AVs on the road as early as 2021. The transition towards the use of AVs will inevitably mean that there will be a mix of autonomous and non-autonomous vehicles on the roads, at least for the foreseeable future. This will present its own challenges with regard to insurance and establishing fault in the event of an accident involving an AV and a non-autonomous vehicle.

Together with this shift in technology, we anticipate a continued change in the model of ownership and use of cars - increasingly becoming owned and operated by fleet managers (rather than by individuals) and made available to individuals on a journey-by-journey basis (as we are already seeing with Gett or Uber, but for AVs).

As such, insurance policies and standards will have to evolve to accommodate this new model as we progress to micro-duration use and away from individual ownership. Accordingly, micro-duration insurance policies will be required.

The nature of the risk will vary dramatically from vehicle to vehicle, owner to owner, journey to journey, for example longer journeys will carry a greater risk of accidents occurring. Insurtech will therefore be called upon to support this new model of hyper-contextualised and tailor-made insurance policies, which will be fully automated and driven by data collected by AVs themselves.

The development of AVs undoubtedly offers opportunities for Insurtech to provide new insurance products that will be required to meet the needs of an ever-changing market and support the adoption of AVs by consumers.  Insurtech is likely to play a very important role by harnessing artificial intelligence, big data mapping and client engagement applications in order to drastically improve insurance services and provide better, more in-depth analysis of risk.

Access to data is therefore vital for insurers, to prevent occlusion of useful information, and to improve underwriting and provision of insurance for AVs. This data will have a vital role to play at every stage of AV’s evolution and will help bring AVs to the global market.  In the event of an accident involving an AV, data will confirm what technology was in use at the time of the incident and whether the vehicle was operating autonomously or not. This will help establish liability, assist emergency services, process insurance claims quickly and help vehicle manufacturers improve their products.

Countries that welcome the development and use of this technology, have the appropriate infrastructure and regulatory framework to deploy driverless vehicles safely, will reap the rewards of AVs in this evolved landscape and win the AV race. We expect Israel to be at the forefront of innovation in this area.