Column: Risk Management

Opinion | This Is Why I’m Afraid of Self-Driving Cars

By: | July 30, 2018 • 2 min read
Joanna Makomaski is a specialist in innovative enterprise risk management methods and implementation techniques. She can be reached at [email protected]

I’m leery of rising in a self-driving car. When I ask myself why, my sense is simply that I fear them. Is it because of the loss of control? Makes little sense as I am often a passenger in a car. Is it the creepy image of watching a steering wheel move from an empty driver seat that unnerves me? That doesn’t make sense either. I truly enjoy many automated devices, like my robot vacuum cleaner.


Besides, the use of autonomous vehicles is inevitable.

But is this new reality being truly accepted? It appears that “traditional” car manufacturers may be a bit asleep at the wheel. They claim these self-driving cars might claim just 2 to 3 percent of their current market.

Prophecy should be an inherent skill for me and my fellow risk managers. As such, I see lots of unaddressed risk when it comes to this automated space. In 10 to 15 years, my prediction is that only autonomous cars will be available to us.

This should be a good news story. We know that today 94 percent of car accidents are due to driver error. What a wonderful world we will have saving 40,000 lives and avoiding maiming 2.5 million of our fellow humans every year in North America.

That said, over these upcoming years, let us think of all the other industries that will need deep transformation and reinvention, starting with our 500-billion-dollar auto insurance market. And what of our whole legal system that sets the rules on liability exposure? Fifty percent of all court cases now involve an automobile. What is to become of our personal injury lawyers? Their transformation is critical if we plan to eliminate whiplash.

Technology will result in millions of surplus traditional workers. This surplus is coming fast.

Let us not forget that there will be less need for parking lot attendants. Our service-oriented autonomous vehicles, after they drop us off at work, will be sent off to work as Uber or Lyft cars, which will likely become a key component in a new kind of public transit system. Gone will be the days of abundant taxis, street cars and buses.

The most common job in the U.S. is truck driver. Driverless vehicles have the potential to eliminate these jobs in 29 out of 50 states.

Is death to driving a good thing? Are we redesigning ourselves accordingly?

Forty-seven percent of U.S. jobs are threatened in the next 15 years. Technological unemployment is real and caused by “the introduction of labor-saving ‘mechanical-muscle’ machines or more efficient ‘mechanical-mind’ processes.”


Technology will result in millions of surplus traditional workers. This surplus is coming fast. Are these mechanical minds coming at us too fast maybe? Are we keeping up with this exponential speed of adoption? Or are we frozen in fear?

Should we consider a more risk-disciplined pace allowing us to react and plan for work alternatives before destroying so many livelihoods? Queen Elizabeth in 1589 refused to patent a weaving machine in fear of her subjects losing their livelihoods. She thus delayed patenting of these machines for another 200 years.

Then I remember that only 150 years ago 80 percent of our jobs were in agriculture, yet today agriculture accounts for only 2 percent of jobs. I find this reassuring. Somehow, we survived and in fact thrive.

But what to do today? Put a thoughtful pause on advancement allowing us to catch our breath, or allow things to unfold unabated?   One thing for sure that is in true need of speeding up is the conversation  on this. &

More from Risk & Insurance

More from Risk & Insurance

Risk Focus: Workers' Comp

Do You Have Employees or Gig Workers?

The number of gig economy workers is growing in the U.S. But their classification as contractors leaves many without workers’ comp, unemployment protection or other benefits.
By: and | July 30, 2018 • 5 min read

A growing number of Americans earn their living in the gig economy without employer-provided benefits and protections such as workers’ compensation.


With the proliferation of on-demand services powered by digital platforms, questions surrounding who does and does not actually work in the gig economy continue to vex stakeholders. Courts and legislators are being asked to decide what constitutes an employee and what constitutes an independent contractor, or gig worker.

The issues are how the worker is paid and who controls the work process, said Bobby Bollinger, a North Carolina attorney specializing in workers’ compensation law with a client roster in the trucking industry.

The common law test, he said, the same one the IRS uses, considers “whose tools and whose materials are used. Whether the employer is telling the worker how to do the job on a minute-to-minute basis. Whether the worker is paid by the hour or by the job. Whether he’s free to work for someone else.”

Legal challenges have occurred, starting with lawsuits against transportation network companies (TNCs) like Uber and Lyft. Several court cases in recent years have come down on the side of allowing such companies to continue classifying drivers as independent contractors.

Those decisions are significant for TNCs, because the gig model relies on the lower labor cost of independent contractors. Classification as an employee adds at least 30 percent to labor costs.

The issues lie with how a worker is paid and who controls the work process. — Bobby Bollinger, a North Carolina attorney

However, a March 2018 California Supreme Court ruling in a case involving delivery drivers for Dynamex went the other way. The Dynamex decision places heavy emphasis on whether the worker is performing a core function of the business.

Under the Dynamex court’s standard, an electrician called to fix a wiring problem at an Uber office would be considered a general contractor. But a driver providing rides to customers would be part of the company’s central mission and therefore an employee.

Despite the California ruling, a Philadelphia court a month later declined to follow suit, ruling that Uber’s limousine drivers are independent contractors, not employees. So a definitive answer remains elusive.

A Legislative Movement

Misclassification of workers as independent contractors introduces risks to both employers and workers, said Matt Zender, vice president, workers’ compensation product manager, AmTrust.

“My concern is for individuals who believe they’re covered under workers’ compensation, have an injury, try to file a claim and find they’re not covered.”

Misclassifying workers opens a “Pandora’s box” for employers, said Richard R. Meneghello, partner, Fisher Phillips.

Issues include tax liabilities, claims for minimum wage and overtime violations, workers’ comp benefits, civil labor law rights and wrongful termination suits.

The motive for companies seeking the contractor definition is clear: They don’t have to pay for benefits, said Meneghello. “But from a legal perspective, it’s not so easy to turn the workforce into contractors.”

“My concern is for individuals who believe they’re covered under workers’ compensation, have an injury, try to file a claim and find they’re not covered in the eyes of the state.” — Matt Zender, vice president, workers’ compensation product manager, AmTrust

It’s about to get easier, however. In 2016, Handy — which is being sued in five states for misclassification of workers — drafted a N.Y. bill to establish a program where gig-economy companies would pay 2.5 percent of workers’ income into individual health savings accounts, yet would classify them as independent contractors.

Unions and worker advocacy groups argue the program would rob workers of rights and protections. So Handy moved on to eight other states where it would be more likely to win.


So far, the Handy bills have passed one house of the legislature in Georgia and Colorado; passed both houses in Iowa and Tennessee; and been signed into law in Kentucky, Utah and Indiana. A similar bill was also introduced in Alabama.

The bills’ language says all workers who find jobs through a website or mobile app are independent contractors, as long as the company running the digital platform does not control schedules, prohibit them from working elsewhere and meets other criteria. Two bills exclude transportation network companies such as Uber.

These laws could have far-reaching consequences. Traditional service companies will struggle to compete with start-ups paying minimal labor costs.

Opponents warn that the Handy bills are so broad that a service company need only launch an app for customers to contract services, and they’d be free to re-classify their employees as independent contractors — leaving workers without social security, health insurance or the protections of unemployment insurance or workers’ comp.

That could destabilize social safety nets as well as shrink available workers’ comp premiums.

A New Classification

Independent contractors need to buy their own insurance, including workers’ compensation. But many don’t, said Hart Brown, executive vice president, COO, Firestorm. They may not realize that in the case of an accident, their personal car and health insurance won’t engage, Brown said.

Matt Zender, vice president, workers’ compensation product manager, AmTrust

Workers’ compensation for gig workers can be hard to find. Some state-sponsored funds provide self-employed contractors’ coverage.  Policies can be expensive though in some high-risk occupations, such as roofing, said Bollinger.

The gig system, where a worker does several different jobs for several different companies, breaks down without portable benefits, said Brown. Portable benefits would follow workers from one workplace engagement to another.

What a portable benefits program would look like is unclear, he said, but some combination of employers, independent contractors and intermediaries (such as a digital platform business or staffing agency) would contribute to the program based on a percentage of each transaction.

There is movement toward portable benefits legislation. The Aspen Institute proposed portable benefits where companies contribute to workers’ benefits based on how much an employee works for them. Uber and SEI together proposed a portable benefits bill to the Washington State Legislature.


Senator Mark Warner (D. VA) introduced the Portable Benefits for Independent Workers Pilot Program Act for the study of portable benefits, and Congresswoman Suzan DelBene (D. WA) introduced a House companion bill.

Meneghello is skeptical of portable benefits as a long-term solution. “They’re a good first step,” he said, “but they paper over the problem. We need a new category of workers.”

A portable benefits model would open opportunities for the growing Insurtech market. Brad Smith, CEO, Intuit, estimates the gig economy to be about 34 percent of the workforce in 2018, growing to 43 percent by 2020.

The insurance industry reinvented itself from a risk transfer mechanism to a risk management mechanism, Brown said, and now it’s reinventing itself again as risk educator to a new hybrid market. &

Susannah Levine writes about health care, education and technology. She can be reached at [email protected] Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]