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Reasonable, Adequate and Efficient Allocation of Liability Costs for Automated Vehicles: A Case Study of the German Liability and Insurance Framework

  • Fabian PÜTZ, Finbarr MURPHY, Martin MULLINS, Karl MAIER, Raymond FRIEL and Torsten ROHLFS...
Abstract

In general, a functioning liability and insurance framework should ensure an adequate level of third party claimant protection and a reasonable and adequate final allocation of liability costs for the involved parties. This research examines whether the liability and insurance framework resulting from the amendment to German Road Traffic Act meets these two central objectives. The article shows that a reasonable and adequate allocation of liability costs is inhibited because of several barriers that hinder the shift of liability costs from the owner of the vehicle to the manufacturer. In particular, it is highly dependent on the practical application of subrogation claims. The ability and the motivation of motor insurers to conduct subrogation claims could be negatively affected because of a lack of required technical and engineering know-how and because a market-wide conduction of subrogation claims would erode the business model of motor insurance. This article proposes changes to the current framework particularly by removing specific exclusions of product liability and by easing the burden of proof of a product defect.

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Copyright
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited.
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Fabian Pütz, Finbarr Murhphy, Martin Mullins and Raymond Friel are members of the Emerging Risk Research Group at University of Limerick. Karl Maier and Torsten Rohls are Professors at the Institute of Insurance Management at Technische Hochschule Köln.

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References
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1 Butcher, L, Conway, L and Edmonds, T, Briefing Paper: Vehicle Technology and Aviation Bill 2016-17 (London, House of Commons Library 2017).

2 The German legislative body does not follow the classification wording of SAE but uses the terminology of the German Federal Highway Research Institute. The equivalent levels of automation referring to SAE nomenclature would be conditional automation (level 3) and high automation (level 4).

3 We use the term “owner” for the German legal term “Fahrzeughalter” and the term titleholder for the German legal term “Fahrzeugbesitzer”. German law distinguishes between the right of property title and the right of disposal. The owner of a vehicle is the person who owns the right of disposal and has the duty to maintain the vehicle in safe condition. The titleholder is the person or institution formally owning the property title of the vehicle.

4 See Shavell, S, “Liability for Accidents” (2007) 1(2) Handbook of Law and Economics 142 or Faure, MG, “Liability for Unknown Risks: A Law and Economics Perspective” (2016) 7(2) Journal of European Tort Law 198228 .

5 M Schubert, “Autonomous Cars-Initial Thoughts About Reforming the Liability Regime” (Gen Re: Insurance Issues, May 2015) at p 3 <www.genre.com/knowledge/publications/iipc1505-en.html> accessed 14 June 2018; U Lange, “Automatisiertes und autonomes Fahren - eine verkehrs-, wirtschafts- und rechtspolitische Einordnung” (2017) NZV 345; see also notes 6 and 7 below.

6 M Lohmann, “Liability Issues Concerning Self-Driving Vehicles” (2016) EJRR 335 at 339.

7 N Vellinga, “From the testing to the deployment of self-driving cars: Legal challenges to policymakers on the road ahead” (2017) Computer Law & Security Review 847 at 860.

8 C Armbrüster, “Automatisiertes Fahren – Paradigmenwechsel im Straßenverkehrsrecht?” (2017) ZRP 5.

9 Achtes Gesetz zur Änderung des Straßenverkehrsgesetzes vom 16. Juni 2017 (Bundesgesetzblatt Jahrgang 2017 Teil I Nr. 38 Seite 1648).

10 We use the term “autonomous” vehicle for vehicles which technically have the capability to self-reliantly fulfil the driving task in a comprehensive manner and do not require a (human) driver at all (SAE level 5).

11 For example, in case of a credit-financed car the bank typically is the titleholder of the car as long as the debtor has not paid back the credit. However, the debtor still has the factual right of daily disposition and the duty to adequately maintain the vehicle as the owner of the vehicle.

12 Euler, D and Kreuter-Lange, A, “Kraftfahrzeughaftpflichtversicherung” in W Halm, A Engelbrecht and F Krahe (eds), Versicherungsrecht-Handbuch des Fachanwalts (4th edn, Cologne 2011) at 1716.

13 B von Bodungen and M Hoffmann, “Autonomes Fahren – Haftungsverschiebung entlang der Supply Chain? (Teil 1)” (2016) NZV 449.

14 A Komescher, “Produkthaftung” in Halm, Engelbrecht and Krahe, above, n 12, 2229 ff.

15 Council Directive of 25 July 1985 on the approximation of the laws, regulation and administrative provisions of the Member States concerning liability for defective products (85/374/EEC), Art 16.

16 Share of loss expenditures for MTPL-losses, which do not exceed the threshold of €500, from total loss expenditures for MTPL-insurance in the year 2015. Source: German Insurance Association.

17 Duffy, S and Hopkins, J, “Sit, Stay, Drive: The Future of Autonomous Car Liability” (2016) SMU Sci & Tech Law Rev 101 at 116.

18 Commonly sums insured in the German motor insurance market are limited to €100 million.

19 Bertolini, A et al, “On Robots and Insurance” (2016) 8 International Journal of Social Robotics 381 at 385.

20 Bericht der Ethik-Kommission automatisiertes und vernetztes Fahren (Juni 2017) at p 11.

21 See supra, note 8.

22 Marchant, GE and Lindor, RA, “The Coming Collision Between Autonomous Vehicles and the Liability System” (2012) 52 Santa Clara Law Review 1321 at 1337.

23 Source: German Insurance Association (GDV).

24 Today, subrogation claims in the motor insurance business are mainly relevant for cases where one of the insured parties breaches contractual obligations that have to be fulfilled before or after a loss occurrence.

25 Schroll, C, “Splitting the Bill: Creating a National Car Insurance Fund to Pay for Accidents in Autonomous Vehicles” (2015) 109(3) Northwestern University Law Review 803 at 812.

26 With this approach, the procedure to directly claim against the producer shown with the broken line in Figure 1 would not be required with automated vehicles on the road.

27 German Insurance Association (GDV), “Stellungnahme des Gesamtverbandes der Deutschen Versicherungswirtschaft zum Entwurf eines Gesetzes zur Änderung des Straßenverkehrsgesetzes” <www.gdv.de/resource/blob/8810/a724e876287fa4d229604fc385593dea/zum-gesetzentwurf-zum-automatisierten-fahren-2108997827-data.pdf> accessed 24 June 2018; BMW Group and Allianz Worldwide Partners, “Joint position on liability laws to be suitable for future automated vehicles” <www.allianz-partners.com/corporate/press-and-media/press-releases-and-news/BMW-Group-and-Allianz-Worldwide-Partners-Joint-position-on-liability-laws-to-be-suitable-for-future-automated-vehicles.aspx#.WpqTPOcxmUk> accessed 24 June 2018.

28 Volvo Car Group, “Volvo Cars CEO urges governments and car industry to share safety related traffic data” (2017) <www.media.volvocars.com/global/en-gb/media/pressreleases/207164/volvo-cars-ceo-urges-governments-and-car-industry-to-share-safety-related-traffic-data> accessed 24 June 2018.

* Fabian Pütz, Finbarr Murhphy, Martin Mullins and Raymond Friel are members of the Emerging Risk Research Group at University of Limerick. Karl Maier and Torsten Rohls are Professors at the Institute of Insurance Management at Technische Hochschule Köln.

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