How self-driving trucks could change Ontario’s insurance equation

A major Canadian grocery chain is planning to put self-driving delivery trucks on the road in Toronto by year’s end, and an insurance expert tells Canadian Underwriter that may not be as much of a risk as people think.

In a late-September press release, Loblaws says it signed a contract with Gatik, a U.S.-based startup. That deal would see 50 autonomous trucks delivering groceries and household goods to around 300 stores, according to news reports. 

While many details on the insurance side will need to be sorted, there’s no need to panic, says Crystal Kaustinen, client executive for Commercial Insurance at Acera Insurance.

She tells Canadian Underwriter that driverless vehicles operating on Ontario’s public roads must currently still have a driver in the cab as a safety measure. And Ontario has a close eye on the sensor systems in these trucks, she adds, noting they’ve demonstrated the ability to perform in several weather classifications, including ‘small snow,’ ‘small rain’ and ‘heavy rainstorms.’

“They can’t do heavy snowfall. They can’t do quick stopping. It is going to be a problem, especially with that heavy load behind them,” Kaustinen says. “In Ontario, in the winter, our [highway] lines do deteriorate, and [in] construction zones there’s [new] lines everywhere.”

Also in the news: How auto insurance will navigate a world with self-driving cars

In terms of allowing driverless trucking, she says Ontario walks a middle line between U.S. states like Texas and California, which allow the vehicles, and European countries that apply far tighter restrictions. “It’s still pilot project. It is still very monitored by the government,” she tells CU.

If these delivery vehicles are involved in accidents, she adds there will be inquiries. But they may not focus strictly on automotive insurance coverage.

Instead, she says, they may look at issues like cyber security, the possibility of vehicles being taken over by outside actors, or an entire delivery fleet being taken down.

In such cases, questions would examine “what has the fleet owner done to ensure the safety of these vehicles and of other people on the road,” Kaustinen tells CU. “[Or, for] the software vendor, did they make mistakes? Is there an error in [an] update?”

Answers to such questions, she adds, will impact what requirements are set by governments via legislation to enact specific rules to ensure the safety of all road users.

Coverage calculations

For now, Kaustinen notes, auto liability is a shared responsibility and insurance coverages are based on historical data. But new autonomous driving technologies could alter the risk calculus due to the high value of sensors and radars on the trucks. “How much is the repair cost on these vehicles compared to traditional trucks?” she asks.

Also, they could be affected by software bugs and problems stemming from large-scale shutdowns of communications networks.

Those changes could mean fleet insurance for trucks might, at some point, become a “completely non-personal line [since there would be no] human being at the end of the end of food chain,” she says.

In such cases, she says, new coverage models will have to respond to new categories of risks once the P&C industry has examined them.

“Insurance already is not inexpensive. So, if you’re going to want to go this route, it’s going to cost more, especially [in the] beginning until we can get sorted,” she says. “We have to get…the data and know how it actually works.”

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Also in the news: Why the holidays spike truck accidents in prairie provinces

And cyber is likely to be the biggest exposure.

“Regulatory [and] insurance systems need to evolve alongside…the technology to ensure [people] stay safe,” she says.  

“Failure of the sensors, [can happen if] it’s a weather-related, cyber-related, or data issue. But cyber products will [have to] cover those types of things. They’re not just for if somebody steals my data,” Kaustinen adds. “I haven’t seen a cyber product for trucking, manufacturing, or malfunctioning of a self-driving vehicle, specifically on commercial fleets. That [will] need to evolve before we can get launched.”

She says the P&C industry has historically grown to meet new customer needs – and cyber coverage, which didn’t exist 15 years ago, is a prime example. “As this develops, the industry is going to have to grow and adapt to ensure that we’re able to cover these risks.”

Phil Porado

Phil, an award-winning journalist with over 30 years of experience in financial topics, has been managing editor of Canadian Underwriter for more than three years.