Uptake of autonomous vehicles may require more robust reserving strategies by reinsurers to manage claims, Howden Re says.

The volume and complexity of litigation involving vehicle manufacturers, software companies, suppliers and mapping agencies will probably increase, according to the broker’s Shaping the Future of Risk report.

Losses in motor liability lines could be affected by increased adoption of autonomous vehicles, and liability could shift to the vehicles’ technology, meaning a transition from personal motor insurance to product liability insurance.

“Determining which component of the vehicle is at fault will be difficult,” Howden Re said. “As these cases go to court, their decisions could have a major impact on motor liability insurance. Depending on their outcomes, it may require more robust reserving strategies to account for potential variations in claims.”

Up to 40% of global property and casualty premium is from motor, and by 2030 it is estimated about half of new vehicles will be electric. Nearly all new vehicles will be technologically connected, some with self-driving capability.

“As [autonomous vehicles] replace human drivers with artificial intelligence, they aim to minimise road accidents caused by distracted individuals. However, for the foreseeable future, driving will be a hybrid system where both human-driven vehicles and AVs share the road.

“The AI that controls them operates on assumptions that are occasionally incorrect. AVs complicate the accident and claims landscape by making it more challenging to determine responsibility.

“In a hybrid system with both human-driven vehicles and AVs, it becomes difficult to ascertain whether a crash was caused by a technology malfunction or human error.”

Both the occupant and the drivers of other vehicles involved in an accident may file claims against the at-fault car’s manufacturer, potentially increasing costs, Howden Re says.