Artificial Intelligence (AI) in the Transportation Industry: Potential New Risks

April 19, 2021

The commercial transportation industry has seen dramatic changes over the course of the past decades. The industry has adopted emerging technologies to improve safety and efficiency in operations. As part of a broad risk management strategy, technology represents a means of reducing risk exposures as a supplement to the protections of transportation insurance. One of the technologies receiving attention within the transportation sector is that of artificial intelligence, or AI. The relationship between AI and transportation is growing at exponential rates and has the potential to help companies manage risks better than ever before.

What is AI?

Artificial intelligence, or AI, is the concept that allows computers to make human-like decisions in solving problems. Sometimes referred to as machine intelligence or machine learning, AI technology can remember commands, respond to nuances in language, learn from experiences, and perform functions without direct input from humans.

Although the theoretical concept of AI has been around since the early days of the twentieth century, it was not until computing technology was able to process complex commands that theory became reality. In the late 1950s, researchers were able to demonstrate the capabilities and promise of AI, and developments expanded rapidly throughout the 1970s and into today.

AI in the Transportation Industry

How is AI being incorporated into transportation industry operations? There are several promising applications in the transportation sector, including:

• Autonomous or “self-driving” vehicles
• Traffic and route management systems
• Control over remote devices like drones
• Life-saving systems aboard vehicles
• Operational efficiency improvements in shipping, trucking, and rail transportation

The goal of incorporating this technology into transportation operations is to not only improve efficiencies, but to protect the lives and safety of employees, cargo, passengers, and business assets. In many ways, AI serves as an extension to the coverages of transportation insurance by reducing operational risks and their associated liabilities.

New Technologies, New Liabilities

Although AI has shown great promise in improving operational efficiency and safety within the transportation industry, the technology is not without its potential liabilities. In other words, while reducing certain risk exposures, AI may contribute to new risks. Any time new technologies are adopted, new liability exposures can emerge. For transportation, potential liabilities include:

• Assigning responsibility in cases of traffic collisions, particularly when autonomous vehicles are involved. Who is liable in a crash caused by a vehicle without a human driver?
• Data and cyber security risks, including data breaches or loss of sensitive business data.
• Virtual hijacking, or the possibility that autonomous vehicles and AI-based systems can be compromised by hackers.

There are also unexpected or unforeseen risks, such as system-wide failures that lead to entire segments of the transportation sector to come to a stop. Imagine an AI-powered computer network managing a fleet of autonomous vehicles. Now imagine that network experiencing a critical hardware or software failure. Such a catastrophic failure could lead to vehicles losing control or becoming grounded. It could also lead to significant liabilities in terms of property damage, injury, and business interruption. Transportation insurance experts understand that new ways of thinking must be focused on the liability implications of AI. AI represents great promise, but insurance protections must also adapt to meet changing risks.

As AI technology matures, new applications will continue to be developed in all aspects of the commercial transportation industry. In the not-too-distant future, we may have fewer vehicle crashes, lower transportation costs, and more efficient traffic flows on our highways. Transportation industry players must balance the advantages of AI against liability risks. With transportation insurance protections and a better understanding of the advantages and risks of AI, companies can make more informed decisions about the future of their operations. ◼