An Insurance Europe executive has questioned a proposal put forward by the European Parliament’s legal affairs committee, that calls on the European Commission to look at the establishment of a blanket, compulsory insurance scheme for robotics.
The European Parliament recently voted to approve a report produced by its legal affairs committee regarding civil law rules on robotics, which includes the proposal of a blanket compulsory insurance scheme for robot producers to protect damages caused by their robots.
Nicolas Jeanmart, Head of Personal Insurance, General Insurance and Macroeconomics at Insurance Europe, said that while the European Parliament’s overall work on robotics is welcomed, some elements of its report raise some questions and concerns.
“Compulsory insurance only works in specific cases and when certain market pre-conditions are met; such as the availability of sufficient claims data, a high level of standardisation and plentiful insurance capacity to manage risks and cover claims. This is not the case for robotics,” says Jeanmart.
Much like other emerging and complex risks, such as cyber, a lack of sufficient data makes pricing such a risk for the insurance and reinsurance industry extremely difficult. Furthermore, varied technological innovations and advances that are explored in the report, produced by the legal affairs committee, underline different risks and raise numerous liability issues, explains Jeanmart.
“Because of these differences, a single regulatory approach to all such emerging technologies would not work.
“Instead of boosting the insurance market, a compulsory insurance scheme would likely lead to a less dynamic insurance market and high premiums. This is because an obligation to insure new risks without sufficient information and data would oblige insurers to factor into their premiums the uncertainty around future claims. This could in turn deter producers of innovative, emerging technologies from placing their products on the market,” continued Jeanmart.
The report on robotics and the commentary from Insurance Europe provides an interesting insight into the world of robotics, and specifically what the rise of robots could mean for the insurance and reinsurance industry.
The capacity required for such an exposure would likely be huge, and where substantial insurance is required so to is significant reinsurance capacity. Exposures such as this remain in their infancy when considering risk protection and risk transfer, but it’s going to be very interesting for everyone in the risk transfer industry to see how robotics, cyber, and alike, continue to reshape the global risk market in the months and years ahead.