NTC Policy Paper sheds light on CAV accident injury insurance regulatory reform

The National Transport Commission’s (NTC) recently released a policy paper on motor accident injury insurance and automated vehicles and sets the scene for future regulatory reform to herald the introduction of connected and autonomous vehicles (CAVs) in Australia. The policy paper:

• has been published following public consultation;
• makes recommendations, approved by the Transport and Infrastructure Council, to be endorsed by state and territory ministers and the Board of Treasures;
• recommends a coordinated national approach to reform; and
• addresses both injured party access to appropriate compensation and insurers’ right of recovery against at-fault parties.

This post examines key themes raised by the policy paper and their impact on the near and medium-term future of CAV regulation.

Background

The NTC has been tasked with developing ‘a regulatory framework to support the safe commercial deployment and operation of automated vehicles’, including assessing motor accident injury insurance frameworks and access to compensation. As motor accident injury insurance schemes are within state and territory governments’ purview, and prudential regulation of commercial insurers is within the Commonwealth government’s purview, the NTC is coordinating a review which guides regulatory reform across jurisdictions.

The policy paper makes recommendations on the principles of a national approach to motor accident injury insurance and CAVs and identifies further necessary work programs. A follow up review of insurance schemes is to be carried out when CAVs ‘are a statistically sufficient portion of registered vehicles’ to allow assessment of their safety, acknowledging that ‘it is not appropriate to indicate a timeframe because it is anticipated that, in the short term, automated vehicles will represent a small percentage of the fleet’.

A national approach

Consultation submissions revealed ‘almost universal support’ for a regulatory approach which expands existing motor accident injury insurance schemes to cover injuries caused by CAVs whilst automatic driving systems (ADS) are engaged. Current schemes are generally designed to cover injuries caused by human error, rather than product faults. In contrast, CAV crash liability is likely to lie with manufacturers, ADS suppliers, communication providers and infrastructure owners (see our earlier blog post on liability when a CAV crashes). Other compensation avenues, such as the Australian Consumer Law, were considered ‘not appropriate’ in place of insurance schemes.

The NTC’s proposed national approach aims to establish insurance schemes that provide effective access to injured persons, whilst ensuring efficient recovery for insurers. The NTC’s recommendations and time frames for further action, discussed below, are subject to endorsement and approval by the responsible minister in each state and territory and the Board of Treasurers.

The key recommendations are:

1. All jurisdictions to review recovery mechanisms for insurers

The first step – identified as a pre-requisite to further reform – will be a review of insurers’ right of recovery processes to identify whether enhancement of existing rights or development of new rights is required to enable insurers to efficiently recover from at-fault parties. The policy paper notes that ‘liability should rest with the party(ies) in the best position to manage or mitigate the risk’. Two years has been allocated for this review process, with legislation to be considered by state and territory parliaments in late 2021.

2. Data access framework

CAV-generated data will be necessary to determine fault in a CAV crash. An injured person’s entitlement to compensation and an insurer’s decision to commence recovery proceedings will, therefore, rely heavily on access to CAV data (i.e. level of automation at the time of the crash, interaction between the CAV and external environment, interaction between the CAV and its occupants). Acknowledging that the status quo may be insufficient for parties to access data efficiently, the NTC recommends a future work programme whereby it ‘coordinate a national approach to a data access framework’. This is earmarked to commence in late 2020, with legislation to be considered in late 2021.

3. Nationally agreed principles

Reform is to be guided by a set of nationally agreed principles, which have been finalised with stakeholder input. As each state and territory’s insurance scheme will differ, these principles, it is hoped, will support national cohesion and consistency in CAV-related reform:

1. Ensure no person is better or worse off, financially or procedurally, in the relevant jurisdiction, if they are injured by a vehicle whose automated driving system was engaged than if they were injured by a vehicle controlled by a human driver.
2. Prioritise simplicity and flexibility.
3. Establish affordable, efficient and fair funding arrangements that allocate the cost of covering the liability for an ADS to those who can best control the risk.
4. Continue reasonable and timely access to compensation regardless of the type of vehicle involved in the injury.
5. Promote transparency and certainty in accessing compensation.
6. Minimise potential litigation between insurers and parties at fault for injuries and deaths caused by automated driving systems.
7. Promote safety innovation.
8. Include efficient processes to access a standard set of reliable and verifiable vehicle crash data.

Next steps

It now lies with the states and territories, guided by the NTC’s work, to take the next steps in reviewing existing schemes and proposing jurisdiction-specific solutions. This may result in piecemeal reform, depending on the priority given to CAV regulation by each jurisdiction. The NTC proposes a timeline for reform, by which a series of legislation is introduced into state and territory parliaments in late 2021:

According to this timeline, we are unlikely to see tangible reform until 2022 at the earliest. Given the rapid pace with which technology can advance and consumer habits change, it will be imperative that policy makers are responsive to changes on the ground. The policy paper foresees the need for further and future review, making clear that CAV regulation will be a work in progress in the mid- to long-term.