In the second half of 2013 personal auto insurers began noticing an increase in auto collision losses. Crash rates had been falling for more than 25 years due to improvements in safety awareness, technology and enforcement, and the reasons for the sudden uptick were subject to much speculation.
In response, the Casualty Actuarial Society, the Society of Actuaries and the Property Casualty Insurers Association of America joined forces to analyze these trends. The product is a paper containing some of the findings around collision frequency. Further analysis is being conducted on frequency trends for other coverages and for severity.
- Increase in congestion, as measured by drivers per lane mile and commute times among others, positively correlates to collision frequency.
- Mobile broadband access (used as a proxy for the likelihood that a driver may have a mobile device while driving) appears to have no impact on collision frequency.
- The system (no-fault vs. tort) doesn’t appear to impact the expected collision frequency, but has a big impact on the variance of the frequency.
The group’s goal is to provide an analytical basis for discussing and understanding auto insurance loss cost drivers that ultimately affect premiums. Subsequent reports are expected to be released.