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The road transport landscape is changing, with disruptive technology as well as social, economic and environmental factors all influencing the direction of travel.
The UK Government’s Future of Transport Programme has observed that “electrification, connectivity, automation, and real-time data collection and analysis are driving the development of new modes of travel and new ways to do business”.
In addition, we are seeing the emergence of technology that “will drive radical changes in transport in the next 10 years”. From electric vehicles, to micromobility vehicles and early vehicle automation, along with the development of policy and the regulatory framework to support it.
Throughout the pandemic we have also seen a socially distanced commuting public accelerate the role that micromobility vehicles may play in the future. In particular, there has been a marked increase in the use of e-scooters, which by their nature are single-user vehicles.
Alongside this, the growth of the electric vehicles market in the UK is expected to accelerate ahead of the ban on new petrol and diesel car and van sales from 2030, announced by the Government in November 2020.
New technologies, however, bring opportunity and risk, both of which are most often finely balanced. Success or otherwise is largely dependent on the impact on the particular ‘ecosystem’ in which that technology will operate.
What is clear is that an ever-evolving road transport system will require a legal and regulatory framework that can respond to change and adapt with developments in technology.
Changes to that framework are underway. Here we look at the recent steps that have been taken and, as part of this evolving landscape, we then go on to consider a number of associated emerging risks and challenges for insurers and other key stakeholders, with a focus on e-scooters and electric vehicles.
Legal and regulatory developments
2021 saw a number of significant developments that will shape the future legal and regulatory road transport framework in the UK. 2022 promises much of the same. Here, we highlight the key developments around micromobility, autonomous vehicles, the transition to zero emission vehicles, a proposed Road Collision Investigation Branch, and the Motor Vehicles (Compulsory Insurance) Bill.
It is all too easy to see how, unless properly informed by a public education information campaign, users may assume, for example, that an intelligent cruise control system or assisted lane keeping system is ‘fully autonomous’.
New technologies bring opportunity and risk, both of which are most often finely balanced. Success or otherwise is largely dependent on the impact on the particular ‘ecosystem’ in which that technology will operate.
2021 was the year the Government had targeted for fully self-driving vehicles to be on UK roads.
Although this ambitious plan is yet to be realised, 2021 saw significant strides towards making it a reality with the Government restating its commitment “to supporting the development and deployment of automation in road vehicles”.
Automated lane keeping system technology
The introduction and roll-out of automated lane keeping system (ALKS) technology could potentially be the vanguard to autonomous technologies being deployed on a wider scale across the roads of Great Britain.
Having launched a Call for Evidence on the use of this ‘lane keeping’ technology on Great Britain’s motorways in August 2020, the DfT published its findings on 28 April 2021.
On the use of ALKS up to 70mph, a “small majority of respondents opposed the idea of allowing ALKS vehicles to drive up to 70mph, many because they consider ALKS to be unsafe and that current technology does not support safe operation at higher speed”.
The next steps include commissioning research “to scope the technical requirements needed for enabling motorway-based automated driving systems to operate at higher speed and change lanes”.
Highway Code to be AV ready
One corollary of the technological advances in road transport is the need to adapt road rules to address the use of artificial intelligence. Proposed changes to the Highway Code are an acknowledgment of this.
Recognising the merit in adapting the Code, Kennedys has called for some adjustment to the proposed wording in respect of the level of attention to the vehicle and road required by users of automated vehicles when in autonomous mode.
Law Commissions: a new legal and regulatory framework
The Law Commission of England and Wales and the Scottish Law Commission published their joint report on the legal and regulatory framework necessary for the safe introduction of self-driving vehicles.
The report - a culmination of three very detailed consultation papers published between 2018 and 2020 – provides 75 recommendations, including the introduction of a new Automated Vehicles Act “setting out new regulatory schemes and new legal actors”.
For an automated driving system (ADS) feature to be self-driving, the Law Commissions have recommended that "the authorisation authority must be satisfied that it can control the vehicle so as to drive safely and legally, even if an individual is not monitoring the driving environment, the vehicle or the way that it drives".
Recognising the potential role for micromobility vehicles, the UK Government is currently undertaking rental e-scooter trials. Brought forward as a result of the pandemic and expanded in scope across the country, they are currently available in approximately 30 areas.
Under the existing regulatory regime most, if not all, micromobility vehicles are considered motor vehicles. As such they require registration, licensing, testing, plating, an appropriate level of driving license and critically, mandatory third-party motor insurance cover.
Outside of those trials, and despite it being illegal to do so, an increasing number of privately owned e-scooters are being used on public roads and in public places. This indicates that users are unaware of the current law and regulatory framework, or choose to ignore it.
With e-scooters capable of causing significant or fatal injury, and/or damage to other road users and adjoining properties, the spotlight is firmly on how micromobility vehicles should be classified for regulatory purposes.
Figures published by the DfT on 25 November 2021 provided some insight into e-scooter collision and casualty trends. The UK Government estimated there were “253 seriously injured and 675 slightly injured casualties” during the 12-month period ending June 2021.
As part of its Future of Transport regulatory review programme, the Office of Zero Emission Vehicles launched a consultation on new primary legislation that would introduce, “a statutory obligation to plan for and provide charging infrastructure”.
The consultation is part of the wider review that included consultations on maritime autonomy, the future of flight, and modernising vehicle standards. It aims “to address areas of transport regulation that are outdated, a barrier to innovation, or not designed with new technologies and business models in mind”.
A Government response to the consultations is awaited, with indications being that substantive legislative reform will be required. While it is imperative that regulation adapts to technological advancements, caution must be exercised in light of the potential additional risks to insurers arising from the current proposals.
In October 2021 the DfT sought views on creating a Road Collision Investigation Branch (RCIB), described as “a dedicated body to investigate causes of road traffic collisions".
The primary aim of the RCIB would be to carry out thematic investigations and probe specific incidents of concern to establish the causes of collisions and make independent safety recommendations to help improve road safety across the country.
It is proposed that the RCIB should cover all manner of road vehicles, in order to keep pace with the changing technological landscape on our roads.
Setting up a counterpart for the branches that already exist for rail, air and maritime accidents could mean greater cooperation and unified thinking that lead to the roll-out of preventive measures.
However, with regard to the remit of the proposed RCIB, we consider any suggestion that would enable it to make determinations of blame or liability as problematic and potentially unworkable.
On 21 February 2021, the UK Government announced its decision not to follow the Court of Justice of the European Union (CJEU) decision in Vnuk v Zavarovalnica Triglav dd [2016].
The Government’s decision was widely welcomed by the UK insurance market and the Motor Insurers’ Bureau (MIB). Following Vnuk, a wider range of vehicles could have fallen within the scope of compulsory insurance requirements had the CJEU’s decision been enshrined into UK law.
A ministerial statement published on 29 June 2021 reiterated the government’s commitment “to remove the effects” of the Vnuk decision and its intention to continue exploring “bringing forward the necessary legislation as soon as parliamentary time allows".
In that context, reference was made to the introduction of a Private Member’s Bill. The Motor Vehicles (Compulsory Insurance) Bill “aims to deliver the necessary legislative change”, with the statement noting that its passage will be followed “with interest” by the Government.
The Bill was introduced to Parliament on 21 June 2021, and having completed the various stages of review in the House of Commons, the committee stage line by line examination of the Bill took place in the House of Lords on 29 March 2022.
Whilst it is questionable whether legislative change is required to counteract the impact of Vnuk (bearing in mind the Road Traffic Act 1988 had not been amended to comply with the Court of Justice of the European Union’s decision in the first place), legislative change should bring clarity.
If the proposed RCIB is fully resourced and the limits of its powers sensibly and properly delineated, it could well be a positive step for all road users and those involved in the wider motor industry.
Key topics to watch in 2022
Having looked at the key legal and regulatory developments, we now consider a number of the associated emerging risks, with a focus on e-scooters and electric vehicles.
Although product liability insurance is likely to be the main focus for EV related losses, other types of liability insurance (such as employers’, public, cyber, motor, property and environmental) could also be affected.
Insurers expense ratios are changing, particularly as a result of the challenges presented in connection with the repair of EVs following collisions.
As with any new technology, there are several multifaceted potential risks which are likely to present challenges in establishing where liability, and ultimately responsibility for recompense, rests. Liability insurers and their insureds will need to give careful consideration to these emerging risks and related potential claims.
Lower noise levels
A sound generator known as an Acoustic Vehicle Alert System (AVAS) - activated at speeds below 12mph to alert visually impaired pedestrians and assist other vulnerable road users - has been mandatory for all new electric and hybrid vehicles (HVs) registered in the UK from 1 July 2021.
However, concerns remain that drivers might be able to pause their AVAS, thereby switching off the sound.
While all new electric vehicles registered in the UK from 1 September 2023 will be prohibited from installing an AVAS pause switch, there have been calls for this change to be implemented sooner and for older vehicles to be retrofitted.
Software malfunctions and cyber attacks
As the technology, software and systems employed within EVs become increasingly sophisticated, connected and automated, this is likely to give rise to increased potential for cyber risks, including software malfunctions and also malicious cyber-attacks on EVs and their charging stations, targeting for example their operating systems and user billing details.
Fire hazards
Views are divided on the different types of EV batteries. Both nickel manganese cobalt and lithium-ion phosphate batteries can potentially overheat with the risk of intense fire. These batteries also store substantial amounts of energy that could give rise to an explosion if not dealt with correctly, even after being discarded.
Workplace hazards
The Health and Safety Executive (HSE) has identified that EVs and HVs also introduce hazards into the workplace in addition to those normally associated with general repair and maintenance. These include the presence of high voltage components capable of delivering a fatal electric shock, even when a vehicle is switched off, and that vehicles may move unexpectedly due to magnetic forces within the motors.
There are also manual handling risks associated with battery replacement, given their weight and the potential for the release of toxic liquids/chemicals and explosive gases if batteries are damaged or incorrectly modified. The HSE has also highlighted the potential for the electrical systems of EVs to affect medical devices such as pacemakers.
In similar terms to the concerns that e-scooters may present to employers who provide storage and charging facilities, the fire and workplace hazards highlighted here present the risk of potential claims, as well as reputational damage.
Skills shortage
A shortage in the motor mechanic workforce qualified to service and repair EVs — at least in the short and medium term — presents a further workplace hazard, should attempts be made to work on EVs by mechanics/technicians that have not had the requisite training. This skills shortage is also impacting repair delays and motor accident claim costs.
In the coming months of 2022, we may have greater clarity on how e-scooters will be classified and therefore what regulation they will be subject to.
Classification more akin to electrically-assisted pedal cycles or bicycles and less akin to mopeds or motorbikes would remove the need to carry mandatory third-party insurance cover.
The existing mechanisms and frameworks that provide a safety net for innocent parties injured in road traffic accidents caused by uninsured and/or untraced drivers would not provide protection. The fear of there being no insurer of last resort for innocent parties in those circumstances is a very real one.
It remains to be seen to what extent household or motor insurers will offer bespoke insurance or will extend and provide gap insurance to cover first and third-party loss on privately owned e-scooters.
Whilst it seems unlikely that existing household policies would extend to cover third-party cover for privately-owned e-scooters, it is at least possible this could happen if e-scooters are categorised as a non-motor vehicle.
With the future direction of regulation as yet to be determined, insurers will certainly need to check to ensure their primary or add-on products do not unintentionally extend to cover e-scooters.
Insurance and reinsurance
Transport and logistics
United Kingdom