Autonomous vehicle report highlights ship insurance issues

Malcolm Latarche
Malcolm Latarche

31 January 2017


Despite being one of the oldest means of transport, shipping is commonly seen today as lagging behind the aviation and automotive sectors in a number of areas. The latest hot topic in this area is autonomy. While autonomous aircraft are frequently used for military and surveillance purposes it is likely that passengers will still prefer piloted craft. However, research into autonomous vehicles and marine craft is continuing at a pace. Autonomous ships may be some years away but cars are already in use in small numbers causing a rethink of the regulatory regime around them. And that may have some implications for shipping as well. Last year the UK government’s Centre for Connected and Autonomous Vehicles (CCAV) published a consultation seeking views on proposals to support advanced driver assistance systems and automated vehicle technology. Some initial responses to the consultation have just been published. The comments on insurance are quite interesting. The key objective in this area was to ensure that the rights of victims of incidents involving autonomous vehicles was not jeopardised and what the liability of the insurer would be. The government proposed that compulsory insurance for autonomous vehicles is implemented through a single insurer model. In other words, the insurer covers both the driver’s use of the vehicle and the AV technology itself, so that the driver will be covered when they are driving and when they have activated the automatic technology. Something along those lines already applies to ships which of course even today can sometimes be operating on autopilot. But there are two circumstances where the insurer will not be liable:
  • when the driver failed to install required updates to the vehicle’s software
  • where the driver makes unauthorised updates to the vehicle’s software.
The government has also made clear that an insurer cannot avoid paying compensation to a victim if the accident is the result of the AV being hacked. Where the manufacturer of the vehicle is found to be liable, the insurer will be able to recover against the manufacturer under existing common law and product liability laws. The insurance regime for ships is quite different to that for road vehicles and has been established over centuries. Even so it varies around the globe as regards limitations to liability except in some cases covered by international conventions and the development of the autonomous ship could be an appropriate time to harmonise this. The issue of updates to software and the consequences of hacking is an interesting subject in itself and one wonders how this would be covered by the marine insurance sector. Unlike cars, ships feature equipment from many different system suppliers and it would hardly seem fair to blame the shipbuilder for software faults in an engine management system or an ECDIS.