Room for Compulsory Product Liability Insurance in the European Union for Smart Robots? Reflections on the Compelling Challenges

Abstract

The twenty-first century has seen the exponential rise of machines capable of assisting people in all sorts of areas and which are placed in use in, inter alia, agricultural, medical, industrial and domestic contexts. These machines gradually becoming ‘smart’ and beginning to operate with self-learning tools has given rise to concerns as to liability in respect of losses arising from their use. The need to safeguard the rights of the parties harmed by their use (victims) without disturbing the policy of fostering innovation in the European Union has recently paved the way for the initiative of the European Parliament Committee on Legal Affairs towards the proposal of a set of rules on civil liability for robotics. The chapter provides an analysis of various potential risks that may emerge from applying the current product liability rules to new technologies, as well as focus on the challenges posed by the adoption of a compulsory product liability insurance scheme, as proposed. As the requirement of a duty to insure may bring along intricate problems of moral hazard, the chapter considers the efficiency of tools such as the monitoring of the insured’s behaviour and the introduction of deductibles into policies in alleviating this problem. It also assesses to what extent the protection of victims may be disturbed because of certain practices of the insurance framework such as the use of claims-made policies in product liability insurance. Overall, the chapter seeks to highlight the advantages and drawbacks of the proposed compulsory product liability insurance scheme.