Government Regulation, F&I Administration, and Our Autonomous Future



Companies like Google, Tesla, and BMW are leading the charge on autonomous vehicles—but regulatory concerns and questions about fault may slow them down.

Integrated smart homes, face recognition software, and more – technology continues to advance at a rapid pace. But one innovation could bring truly sweeping change: autonomous vehicles.

While it all might seem like full speed ahead, there are questions: how does legislation need to shift to make way for the future, and how will driverless tech change the way both vehicles and drivers are insured? The Society of Automotive Engineers developed five levels of classification for autonomous vehicles – most require legislative reform and each will likely bring about changes to auto F&I policies. Let’s take a look:

Level One: Driver-assistance

Level One autonomous vehicles integrate innovations like adaptive cruise control, anti-lock braking, lane-departure warnings, adaptive headlights, and self-acceleration. Despite advanced features, these vehicles still require complete human control and, as a result, have managed to avoid regulation. That said, innovation—and cost—even at this level, have raised some eyebrows in the insurance industry and made providers resistant to offer coverage. 

Level Two: Partial automation with driver-assistance

More technologically complex, Level Two vehicles can take control and assist their drivers with features like self-parking, lane centering, and even autopilot.

After several rounds of testing, autopilot systems became legal just last year with the passage of a driverless car bill allowing future Level Two development. Still, there are questions. Operator safety and liability are obvious concerns, but what if a costly new feature like autopilot simply goes on the fritz? What will it cost F&I providers to cover a repair?

Level Three: Vehicle-controlled, safety-critical decisions

At Level Three, autonomous vehicles decide when to take control and when to shift responsibility back to the driver. To date, only one Level Three vehicle is on the cusp of a release: Audi’s R8 model with AI Traffic Jam Pilot. However, given that there’s currently no federal law allowing this level of automation, regulations would require state-by-state passage.

Additionally, with variant travel infrastructure across the U.S., processing issues for an unprepared AI system could be dangerous. At Level Three, not only are we entering some really sticky legal territory, but one must wonder: who would want to cover the potential pitfalls of this vehicle type?

Level Four: High-level automation

Welcome to the future. At Level Four, automated vehicles can complete an entire trip with no driver intervention except in emergency conditions. This technology is so advanced, it’s still exists as only an idea. As you might imagine, both the government and forward-thinking insurance companies are struggling to figure out how to address future concerns includingliability questions, cybersecurity, and personal privacy.

Level Five: Total automation

Finally, at the SAE’s Level Five, autonomous vehicles require no human control whatsoever – they are completely driverless.

But again, as the technology advances, the concerns increase for passengers, manufacturers, lawmakers and insurance companies—and the questions are numerous. Will driver licenses be necessary? Without control, what happens if a critical system fails? Who’s to blame? And who will be willing to cover vehicles and passengers under these circumstances?

The world still has a long way to go before every passenger can sit back, relax, and enjoy a truly automated experience—but eventually we’ll get there. Still, as you can see, the risks associated with autonomous vehicles are real. As we await these advancements, are you partnering with an underwriter who is working to understand these changes and how they could affect your business? Fortegra is doing just that, engaging with automakers and legislators alike to truly understand what these innovations mean for our industry.

Work with us—and make sure you’ve prepared your company for our autonomous future.

Fortegra® is the brand name for the insurance, specialty underwriting and warranty solution operations of Fortegra Financial Corporation and its subsidiaries.

Categories: Automotive

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