Category Archives: Auto Trends

Wedding Tractor Trailers to the Internet of Things: What Could Possibly Go Wrong?

“We went out again. We got maybe six steps before lights blared in our faces. It had crept up, big wheels barely turning on the gravel. It had been lying in wait and now it leaped at us, electric headlamps glowing in savage circles, the huge chrome grill seeming to snarl.”

Transportation and logistics companies are now among the top-targeted industries by computer hackers

When Stephen King wrote Trucks – a tale of big rigs, pickups, and earth movers coming suddenly to life and terrorizing people they had trapped in a diner – he didn’t speculate about how or why they’d been incited to malevolence. Aliens? The Soviets? Who cared? It was the 1970s, and all he needed to do was deliver a solid horror yarn.

I loved that story when I read it in high school – mainly because it scared the daylights out of me and yet I knew for sure it couldn’t happen. Could it? Nah!

Today I read an article about “platooning”, in which “a lead vehicle wirelessly assumes control over the throttle and braking of one, two, or more vehicles following along behind it. In many scenarios, the drivers in a platoon continue to steer their vehicles and can disengage from the convoy at any time, but the first vehicle determines the speed and braking maneuvers of the entire platoon. Because the follower trucks maintain constant communication with the lead vehicle and have synchronized acceleration and braking, platooning trucks can maintain much shorter distances between themselves as they travel.”

Bam! I was right back in that 1970s diner inside Stephen King’s warped, brilliant, and quite possibly prophetic brain.

From there I time traveled forward to Bastille Day 2017 in Nice, France, where 84 people were killed when a radicalized individual plowed a 20-ton truck into a crowd waiting to watch a fireworks display. The previous December, CNN reminded me, 12 people were left dead and 48 injured when a tractor trailer was driven into a Berlin Christmas market.

“Platooning, which is based on vehicle-to-vehicle (V2V) communications, has been shown to increase the fuel efficiency of both the lead and following vehicles, saving fleet operators money and reducing carbon dioxide emissions,” the article in Verisk’s Visualize insurance news and thought leadership site tells me comfortingly. It cites a German pilot program in which truck platooning generated fuel savings of 3 to 4 percent. Platooning could lead to huge cost savings for businesses and consumers.

Who doesn’t love fuel efficiency?

And then I read an article in Today’s Trucking that began:

“When Harold Sumerford’s phone rang at 2:30 a.m. on April 2, he knew the news couldn’t be good. But he figured it was probably the safety department – not the CFO telling him the company’s entire computer system was down from a ransomware attack.”

Sumerford is CEO of J&M Tank Lines. According to the article, it took four days for his company to begin functioning after the attack, “and during those four days, they weren’t able to bill any customers or enter anything into the system.”

Granted, this is a far cry from having the entire fleet go on a murderous rampage, but the Internet of Things is still young.

J&M’s experience, according to Today’s Trucking, was “just one example of a rapidly growing problem with cybersecurity in the trucking industry. Transportation and logistics companies are now among the top-targeted industries by computer hackers.”

According to an article in ZDNet published just a few weeks ago, “Hackers are deploying previously unknown tools in a cyberattack campaign targeting shipping and transport organisations with custom trojan malware. Identified and detailed by researchers at Palo Alto Networks’ Unit 42 threat intelligence division, the campaign has been active since at least May 2019 and focuses on transportation and shipping firms operating out of Kuwait in the Persian Gulf.”

This as everyone I know seems to be panting with enthusiastic anticipation for vehicles that drive themselves!

Look, I’m no Luddite. I appreciate the benefits offered by and realized through interconnectivity.

But I also have a front row seat observing the difficulties people who assess and quantify risk for a living experience in getting and keeping their heads around the ever-changing world of cyberrisk.  As data and “stuff” become increasingly intertwined and the risks surrounding them are less clearly defined, is it so unreasonable to suggest that pushing humans out of the driver’s seat at this moment isn’t the only or best path to traffic safety, low prices, and reducing our collective carbon footprint?

NICB: Motorcycle Thefts Declined in 2018

Getty Images

Motorcycles are popular with riders seeking affordable transportation options and the thrill of the open road. But they can also be attractive targets for thieves. The good news is that motorcycle thefts saw a decline in 2017 and 2018 after an uptick in the previous two years.

According to the National Insurance Crime Bureau’s (NICB) annual motorcycle thefts report, in 2018 motorcycle thefts were down by six percent with a total of 41,674 motorcycles reported stolen compared with 44,268 in 2017. About 44 percent of the motorcycles stolen in 2018 were recovered.

In general, motorcycle thefts are a seasonal crime related to warmer months, with 10 percent or more of thefts from the yearly total occurred in May, June, July, August, September, and October.

According to the report the top 10 states for motorcycle thefts in 2018 were:

  • California (7,035)
  • Florida (4,279)
  • Texas (3,073)
  • New York (1,777)
  • South Carolina (1,743)
  • North Carolina (1,466)
  • Indiana (1,229)
  • Missouri (1,194)
  • Georgia (1,174) and
  • Colorado (1,109)

The top 10 cities for motorcycle thefts in 2018 were:

  • New York (1,310)
  • Los Angeles (628)
  • Miami (595)
  • Las Vegas (540)
  • San Diego (527)
  • San Francisco (520)
  • Houston (460)
  • Philadelphia (404)
  • Austin (329) and
  • San Jose (322)

The top 10 most stolen motorcycles in 2018 by manufacturer were:

  • American Honda Motor Co., Inc. (8,260 thefts)
  • Yamaha Motor Corporation (6,655)
  • American Suzuki Motor Corporation (4,882)
  • Kawasaki Motors Corp., U.S.A. (4,861)
  • Harley-Davidson, Inc. (4,769)
  • Taotao Group Co. Ltd (1,851)
  • KTM Sportmotorcycle AG (780)
  • Genuine Cycle (515)
  • Ducati Motor Holding (455)
  • Kymco U.S.A., Inc. (413)

The NICB offers the following fraud and theft prevention tips:

  •  Purchase your motorcycle from reputable manufacturers or dealers. When purchasing from a private party, avoid custom or “assembled vehicle.”
  • Take the motorcycle to a local dealership for inspection before purchasing.
  • When purchasing a motorcycle from a private party, consider investing in a vehicle history report. Also, go to your local law enforcement station to make the transaction. Many law enforcement agencies have “safe areas” to complete purchases between private parties.
  • When selling your bike, don’t turn over the title until the funds (check or money order) have cleared the bank.
  • Use common sense; park in well-lit areas, lock your ignition, and remove your keys.
  • Remove the key and lock your motorcycle even if stored in a garage. You may want to invest in additional aftermarket lock(s) and even a theft-deterrent system with tracking capabilities (e.g. GPS) for your motorcycle.
  • Don’t store your title in your motorcycle’s storage compartment.
  • Place unique markings on your motorcycle and take photos of them. If your bike is stolen, you can use these markings to identify your property.

The I.I.I. has Facts & Statistics on auto theft here.

Dodge Charger tops HLDI’s list of most likely to be stolen vehicles

The Dodge Charger HEMI and the Dodge Challenger SRT Hellcat are at the top of the Highway Loss Data Institute’s (HLDI) most-stolen vehicles list this year. Both cars have theft rates that are more than five times the average for 2016-18 models, with the same as the Infiniti Q50, a midsize luxury sedan.

HLDI released its most likely to be stolen list for 2016-2018 models today, and almost all 20 models with the highest theft rates either have big engines or are luxury vehicles or pickups.

At the top of the least stolen list is the two-wheel-drive BMW 3 series, a midsize luxury sedan. It had just one claim for whole-vehicle theft in 104,901 insured vehicle years (an insured vehicle year is one vehicle insured for one year).

The Tesla Model S and Model X are also on the least-stolen list. A 2018 HLDI report showed that electric vehicles from a variety of manufacturers have lower theft claim rates than comparable vehicles. Their low theft rate may be due to the fact that they are usually parked in garages or close to a house to be near a power supply.

The Cadillac Escalade, which previously dominated HLDI’s rankings of most-stolen vehicles, is notably absent from this year’s list. Part of the reason is that there are more large luxury SUVs for thieves to choose from but also because Cadillac added enhanced security features beginning with the 2015 model year.

“The models most likely to be stolen tend to be powerful, pricey or pickups, but vehicle theft is also a crime of opportunity,” says HLDI Senior Vice President Matt Moore. “Better security features on all vehicles would be the best way to address the problem.”

 

Latest Driverless Vehicle Roadblock: Bicycles

I hope he’s wearing a helmet.

As someone who (perhaps unwisely), likes to bike around New York, I’ve long looked forward to driverless cars. They can’t drive drunk. They won’t drive like reckless teenagers. They won’t threaten to beat me up for ringing my bell (true story).

Even better: they’ll be able to see and avoid me even on a dark and stormy night.

Or so I thought.

As it turns out, bicycles could slow driverless vehicle deployment. Case in point: Holland, land of bicycles.

According to a recent KPMG report, the Netherlands is the country most prepared for autonomous vehicles. The country is actively working to begin autonomous truck platooning on highways; a legal framework has been developed for testing AVs on public roads without a driver; and the country is even preparing a drivers license for AVs.

But whether AVs will ever operate in Holland’s cities is an open question. Because, as an executive quoted in the report put it, “We have a lot of bicycles.” That’s an understatement. According to The Guardian, there are an estimated 22.5 million bicycles for a population of 17 million people.

And unfortunately, as the article notes, bicyclists are unpredictable: “the varying sizes and agility of cyclists, with their sudden changes in speed and loose adherence to the rules of the road, present a major challenge to the [AV] existing technology.”

Such a major challenge, in fact, that KPMG suggests forgetting about ever integrating AVs into a bicycle-heavy environment: just keep AVs and bicyclists separated entirely.

We don’t have as many bicyclists in New York. The city estimates somewhere in the ballpark of 1.5 million casual riders.  But that’s probably enough cycling on our already-crowded, dilapidated streets to put a hold on my dream of a safe, driverless vehicle future. (AVs in Phoenix, meanwhile, have an entirely different problem…)

In the meantime, you would do well to wear a helmet and stop texting!

Ridin’ with the Waymos

In Phoenix last week, I did what insurance folks do in Phoenix. I hunted down an autonomous vehicle. I even took a picture:

The ‘W’ on the rear window stands for Waymo, the Google/Alphabet division that is probably the leader in developing driverless technologies.

Depending on which insurance thought leader you talk to, driverless vehicles will revolutionize our business or destroy it. I’m a skeptic: We will have driverless cars; everyone will use them, but not for another 20-plus years; and they will not be the death of auto insurance.

Google’s not-so-secret testing facility is just south of Phoenix, in Chandler. I couldn’t find it on Google Maps (it’s a secret, surprise surprise), but I could find Chandler City Hall. In an adjoining lot sat three or four bubble-headed Waymos. They are eerily identical Chrysler Pacifica minivans. Each is white. Each has the same bubble brain on the same spot of the hood and the same aqua-and-sea-green W logo. And, though they are white, the desert sun reveals no hint of grime.

I parked across the street and began my stake-out. Continue reading Ridin’ with the Waymos

Auto Results: Ups and Downs

While the spike in auto accident rates appears to have eased in the past year or so, increases in claim size continue to present challenges. The folks at Gen Re weigh in:

Industry loss ratios suggest that many carriers are still playing catch-up. With ultimate liability loss ratios above 70% and combined ratios several points above 100%, the industry still has work to do.

Here at I.I.I. we note that for the first half of the year, liability loss ratios have fallen 3 percentage points for personal auto, to 64 percent, but risen 4 points for commercial auto, to 70 percent.  (This comes from NAIC data sourced from S&P Global Market Intelligence. Q3 data isn’t out yet.)

Physical damage loss ratios have fallen 5 percentage points, to 60 percent. Physdam results don’t get split between commercial and personal auto on financial statements until year-end, but the improvement is probably weighted to the personal auto side, since personal physdam is more than 90 percent of total volume.

So the landscape seems to be improving for personal auto but not so much for commercial . . .

. . . Which explains why the Council of Insurance Agents and Brokers reports that commercial auto rates are 7 percent higher than a year ago. It’s the 29th consecutive quarter (more than seven years) of rate increases.

Gen Re spotlights the following trends, most of which transcend personal and commercial lines:

  • Economic Recovery and Miles Driven – The improvement in the unemployment rate puts more cars and a worse mix of drivers on the road.

  • Driver Shortages – The trucking industry estimates a shortage of over 50,000 drivers by year-end, which leads to reliance on inexperienced drivers entering the industry.

  • Distracted Driving – Cognitive distractions and smartphone addiction have contributed to higher accident severity, with statistics often being underreported.

  • Drugged Driving/Marijuana – Studies from Washington, Colorado and Oregon find that accident frequency increased in the years after marijuana was legalized, and more states have since enacted similar legislation.

  • Escalating Repair Costs – Advances in vehicle safety systems, including cameras and sensors, have grown repair costs significantly.

  • Litigation/Jurisdiction – An active plaintiff’s bar, restrictive medical records laws, cost shifting, and litigation funding can drive up settlement values substantially.

We’ve seen similar trends at I.I.I. and highlighted them in this presentation last March in Chicago. The key graphic from that presentation is atop this article. We add speed to the mix, because as cars get more powerful, people drive faster.

 

Is relief in sight for personal and commercial auto claims?

By Steven Weisbart, Chief Economist, Insurance Information Institute

 

 

About three years ago the Insurance Information Institute noticed a strong correlation between the number of people employed and the amount of driving done, as measured by the U.S. Department of Transportation’s monthly survey of vehicle-miles traveled. Of course, it is reasonable to expect that as more people hold jobs, most would drive to work. And as those who had been unemployed gained incomes, they would also logically be likely to drive more for leisure.

Further, we noticed another strong correlation between vehicle-miles traveled, on the one hand, and the collision paid claim frequency rate (as captured by Fast Track Monitoring Service), on the other—which is also a logical relationship. This, in addition to other factors, such as an increase in distracted driving, higher speed limits on some roads and other causes, helped explain the unusual spike in the frequency of auto insurance claims in 2015 and again in 2016.

However, lately these relationships appear to be weakening. For example, the year-over-year increase in vehicle-miles traveled was more than 2 percent in 2015 and 2016, and despite continued steady growth in the number of people employed, was 1.5 percent in the first half of 2017, just under 1 percent in the second half of 2017, and under 0.5 percent in the first five months of 2018 (the latest data available).

It’s possible that the rise in the price of gasoline is affecting vehicle-miles traveled. For most of 2016 the retail price of a gallon of gas (all grades) was less than $2.40, but for the first half of 2017 it averaged $2.50 and for the second half of 2017 averaged $2.65. For the first half of 2018 the average was roughly $2.85.

The collision paid claim frequency rate has also flattened, echoing the pattern of vehicle miles traveled. These new patterns suggest that the beleaguered private passenger and commercial auto claims might finally see some relief following a few years of combined ratios well north of 100.

Automated Vehicle Symposium: Recap

The Automated Vehicle Symposium took place in San Francisco July 9-12.  I.I.I.’s Brent Carris files this report.

Gaining consumer trust is essential to the success of automated vehicle (AV) deployment. It was a point stressed continuously throughout the conference.

U.S. Department of Transportation (DOT) Secretary, Elaine Chao, along with many others, noted that 94 percent of auto accidents occur due to human error. AV control can drastically reduce human error-caused accidents but reaching the “0” level of accidents will be a long work in progress. Joint data sharing by public and private institutions is imperative in the transition to an AV world.

During Secretary Chao’s keynote address, she emphasized the six principles that govern DOT policy for AV technology regulation:

  • Safety is top priority
  • Policies will be flexible and tech-neutral
  • Regulations will be performance based
  • The DOT will collaborate with states and localities
  • The Department will provide stakeholders with assistance to facilitate the safe integration of AV systems into the transportation system, and;
  • The Department recognizes that autonomous vehicles will have to operate side-by-side with traditional vehicles, in both urban and rural areas

Chao briefly discussed insurance, saying “Insurance frameworks are adaptable to the AV world.” Timely data sharing by auto manufacturers and other AV data collectors with insurance companies will be necessary to facilitate proper insurance coverage. Data could be used to establish: Liability in the event of an accident; accurate underwriting and pricing of insurance policies; risk mitigation and control measures. Insurance companies will have to take a proactive approach to ensure timely data sharing and develop consumer perceptions on safety, liability, and coverage for AVs.

In a white paper issued to coincide with the event, the Travelers Institute outlined its views on how autonomous vehicles will change the personal and commercial auto insurance markets.

The DOT announced the third iteration of its Automated Vehicles policy document is slated for release by the end of 2018. The Automated Driving System 2.0: A Vision for Safety was downloaded over 125,000 times since its release in 2017. The 3.0 version will focus on AV development across all modes of transportation – passenger vehicles, trucks, rail, and maritime.

Another important topic was preparing U.S. workers and employers for the automated vehicle future. Lessons from past transitions show that while initial job displacement may occur, full employment eventually returns.

A Securing America’s Future Energy (SAFE) study estimated that the advent of AVs are projected to increase the unemployment rate to a small degree in the 2030s and to a somewhat larger degree in the late 2040s, with a peak, temporary addition to unemployment rates of 0.06–0.13 percentage points. However, an estimated $800 billion will eventually be gained in annual societal benefits due to accident reduction (economic impact and quality of life improvements), congestion mitigation, reduced oil consumption and from the value of time gained from AV. Many speakers stressed that planning for an AV future should start now.

 

 

From the I.I.I. Daily: Our most popular content, March 20-27

Here are the 5 most clicked on articles from the I.I.I. Daily newsletter.

  1. Presentation: Rising Auto Costs

  2. Trending news article: Video shows moments before Uber robot car rammed into pedestrian, The Wall Street Journal

  3. Blog post: The challenge of population projections: future strain on Medicare and Social Security may be even greater than Census figures would suggest

  4. Member Bulletin article: Big Data and Race, R Street

  5. Presentation: Driving while high: Facts and public attitudes

To subscribe to the I.I.I. Daily email daily@iii.org.

 

A new report sheds light on increasing auto loss costs

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.

Findings include:

  • 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.

Source: Auto Loss Costs Trends Report, January 2018