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The automated vehicles bill: Future of self-driving vehicles in the UK

The UK Automated Vehicles Bill presents new opportunities for AV the industry. AV operators must navigate the evolving legal and insurance landscape to ensure compliance and manage risks effectively.

By 2025, the UK will witness the deployment of self-driving vehicles, revolutionising transportation and creating new opportunities in the mobility ecosystem. This development will be supported by a robust regulatory framework, a strong supply chain, and a skilled workforce, enabling businesses and the public to confidently embrace this technology. This vision, known as CAM 2025, is the UK government's response to the growing potential of autonomous vehicles (AV) and their impact on the nation.

The UK market and economic potential

The UK has emerged as a significant player in the self-driving vehicle sector, with 70% of global auto sector companies sourcing from this market. Between 2018 and 2022, the sector attracted GBP475 million in direct investment and created 1,500 new jobs. By 2035, the market is projected to be valued at GBP41.7 billion and create a total of 87,000 jobs.^[1] This growth presents substantial economic potential for the UK.

Levels of autonomous operation

Autonomous vehicles operate at different levels of autonomy. Our risk adviser focuses on autonomy levels four and above (LV4+), which refer to vehicles capable of driving themselves without human input for at least part of a journey.

The Automated Vehicles Bill

The UK government has introduced the Automated Vehicles Bill to establish a legal framework for the safe deployment of self-driving vehicles. The Bill is currently undergoing the parliamentary process and is expected to become law later this year once Royal Assent is received. The Bill addresses key aspects such as authorising automated vehicles, clarifying liability in cases involving automated vehicles, and imposing marketing restrictions to ensure accurate communication of capabilities and limitations. It also allows for the provision of automated passenger services.

We note that although insurance is not addressed in great detail within the bill, the provisions proposed by the Bill will have significant risk and insurance and risk ramifications that require careful consideration by companies involved in AV operations.

Risk and insurance considerations

The Bill includes key definitions and provides clarity on crucial features that give rise to significant risk and insurance considerations. These include the concept of an Authorised Self-Driving Entity (ASDE), licensed operators, the future role of the regulator, incident reporting and investigation, authority holders within AV operations, self-driving marketing, and key liability positions. Therefore, companies involved in AV operations will need to modify their risk and governance frameworks to align with automotive-related laws and policies. Among other important factors, careful consideration and attention will be required to the apportionment of liability, damages to third parties, and the management of cybersecurity risks.

Risk creates uncertainty around an organisation’s objectives, however, effectively managing risk allows an organisation to reduce the potential for a negative outcome whilst maximising the possibility of an outcome that exceeds expectations. The AV Bill encourages autonomous vehicle operators to have specific regard around risks relating to safety and public perception of their products and services. Implementing robust risk management practices around the issues raised in the Bill will benefit autonomous vehicle operators by reducing the likelihood of them being involved in an incident that could cause damage or harm. It also allows the organisation to seize a significant upside of risk in the form of being able to maintain high standards of safety, building public trust in the technology, and also protect against harm to their reputation and the reputation of the sector as whole.

Alistair Schuberth

Risk Partner, Marsh Advisory

Insurance implications

The AV industry has the potential to disrupt the insurance industry itself, shifting liability from drivers to manufacturers and operators. Companies involved in AV operations will need to be acutely aware of key considerations introduced by the bill throughout their broader insurance portfolio, with a particular focus on movement or “mobility” related risks.

Insurance coverage needs to adapt to cover the unique risks associated with AV operations. Composite mobility insurance solutions, or approaches, are recommended to ensure consistent and aligned coverage. Non-UK companies planning AV deployments in the UK must comply with specific local insurance requirements and engage with industry experts to develop bespoke insurance solutions. As based upon our direct experience, the particular merits of each deployment need to be taken into account.

The deployment of self-driving vehicles in the UK presents significant opportunities and challenges. The government's vision, supported by the CAM 2025 initiative and the Automated Vehicles Bill, aims to create a comprehensive regulatory and safety framework for AVs. Companies involved in AV operations must navigate the evolving legal and insurance landscape to ensure compliance and manage risks effectively. By doing so, they can contribute to the growth of the AV industry and the transformation of the mobility ecosystem.

_{¹ The_King’s_Speech 2023, (publishing.service.gov.uk).}