Insurance Information Institute Chief Actuary James Lynch looks at teenage driving:
This chart shows how closely the teen unemployment rate tracks overall auto accident rates countrywide. It’s eerie. When the teen unemployment rate rises in 2008, the rate of accidents plummets.
And in 2013, when teen unemployment falls, claim frequency takes off.
Here accident rates are measured as collision frequency — the number of collision claims per 100 vehicles over the previous 12 months, as measured by ISO. The seasonally adjusted unemployment rate is from the Bureau of Labor Statistics.
The correlation is so strong (R2 = 0.629, for you data geeks) that I’m tempted to hedge. The data seem to say that teen drivers are behind the current spike in auto rates. I think they are part of the reason, maybe even a big part.
Certainly teen drivers with jobs have to get to work, so they log more miles, and that will lead to more accidents in any group, but particularly teens, whose driving records are notoriously bad.
But many people in this age group can’t drive legally. It would take more research to see how much of the spike in claim frequency is driven by younger drivers.
I was inspired to put this together by an article in the Insurance Institute of Highway Safety’s (IIHS) Status Report, which showed how more teens are on the road. Their point was to dispel the idea that teens had given up driving for good, that young people would rather text their friends than see them face to face. Instead, IIHS showed, teens were driving less because they didn’t have jobs. Once they got jobs, they started driving again.
At the Insurance Information Institute, we speak frequently about how driving trends affect insurance. We post our PowerPoint slide decks here. We also collect many facts and statistics on auto insurance here.