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.
Source: Auto Loss Costs Trends Report, January 2018
A survey published last week by AAA found that Americans are warming up to the idea of driverless vehicles with 63 percent of U.S. drivers reporting feeling afraid to ride in a fully self-driving vehicle down significantly from 78 percent in early 2017.
Men (52 percent) are less afraid than women (73 percent) of riding in a self-driving vehicle, and millennials are the least afraid (49 percent).
“Education, exposure and experience will likely help ease consumer fears as we steer toward a more automated future,” said AAA Automotive Engineering and Industry Relations Director Greg Brannon.
The survey also found that U.S. drivers continue to report high confidence in their own driving abilities. Three-quarters (73 percent) of U.S. drivers consider themselves better-than-average drivers. Men tend to be most confident in their driving skills with 8 in 10 considering their driving skills better than average. This is despite of the fact that more than 90 percent of crashes are the result of human error.
The steady decline in auto thefts which started in 1991 is largely attributable to the rise of modern keys, fobs and ignitions, and the ubiquity of statewide anti-theft taskforces. But insurers are keeping an eye on the increase in auto thefts that occurred in 2015 and 2016 and which is projected to continue in 2017, according to a recent Risk Information newsletter.
Car owners have become complacent about theft, with 56 percent of Americans reporting that they rarely or never worry that their car will be stolen. In fact, car owners are getting so relaxed about theft that thousands of vehicles are stolen each year because keys or fobs are left in the vehicle, according to the National Insurance Crime Bureau.
Thieves are also constantly devising new and sophisticated means of stealing autos. Tactics include acquiring smart keys, switching vehicle identification numbers; and using stolen identities to secure loans for expensive vehicles.
Thieves also now have access to devices which search for signals from nearby wireless key fobs and use that signal to unlock and start cars. To counteract this trend a growing market has sprung up for boxes or pouches for key fobs especially designed to block radio transmissions. You can purchase one on Amazon.
The FBI estimates that the number of motor vehicle thefts increased 7.4 percent in 2016 over the prior year. Approximately $5.9 billion was lost nationwide to motor vehicle thefts in 2016 with the average dollar loss per stolen vehicle of $7,680.
The I.I.I. has Facts and Stats on auto theft here.
The III’s Michael Barry briefs our membership every week on key insurance related stories. Here are some highlights.
Hurricane Harvey is expected to bring heavy rainfall and strong winds to Texas and Louisiana over the next few days.
The 25th anniversary of Hurricane Andrew making landfall in Florida on August 24, 1992, generated significant media coverage this week.
The National Transportation Safety Board is convening in D.C. on Tuesday, Sept. 12, at 9:30 a.m., to discuss the fatal Tesla crash which occurred last year in Florida.
The commercial auto line showed a spectacularly rapid deterioration of reserves beginning in 2012. In 2013 carriers begin to cite their trucking books as the source of increased frequency of severe claims, higher than expected large losses and deteriorating loss ratios. This recent GenRe article examines the causes which include:
- A driver shortage affected the quality of the driver pool with more young, inexperienced drivers operating trucks.
- Vehicle utilization levels increased due to an improved economy and lower gas prices.
- Increase in vehicle miles travelled
- Greater availability of safety data on motor carriers has led to attorneys use of this information to target commercial auto cases and win them.
- Attorneys are succeeding in shifting responsibility from the person behind the wheel to the employer and winning large “nuclear verdicts” of over $10 million.
- Increase in traumatic brain injury (TBI) cases. if an attorney can find an expert to allege a TBI, verdicts can be driven to higher levels. The “super experts” are winning TBI arguments in front of today’s jurors.
Some of these trends are the same ones affecting personal auto lines. The author warns that claims departments need to be prepared and proactive.
Insurance Information Institute (I.I.I.) chief actuary James Lynch and I.I.I. research associate Brent Carris share insight on the Tesla Autopilot accident report:
The National Transportation Safety Board (NTSB) released 500 pages of documents on last year’s fatal Tesla Autopilot accident in Florida. Per the initial press release the report contains only factual information on the investigation including highway design, vehicle performance, human performance, and motor carrier factors.
In an email newsletter he writes, autonomous vehicle expert Alain Kornhauser (Princeton University) raised some questions and concerns regarding the report. Those include:
- Since lateral control (swerving) couldn’t have avoided this crash (the truck is almost 70 ft long (6 lanes wide) stretching broadside across the highway) , it doesn’t matter if Josh Brown ever had his hands on the steering wheel. That’s totally irrelevant.
- Why didn’t autobrake kick in when the tractor part of the tractor-trailer passed in front of the Tesla?
- How fast was the truck going when it cut off the Tesla? I couldn’t find the answer in 500 pages.
The full 500 page report is also available to view at NTSB: Docket Management System.
Airbags help save thousands of lives every year, but in the case of Takata Corp, the company’s exploding inflators have been linked to at least 16 deaths worldwide and more than 180 injuries.
Takata’s filing for bankruptcy protection in the U.S. and Japan and $1.6 billion sale of its assets to Key Safety Systems is the latest twist in what has been described as the largest and most complex automotive recall in history.
“The Chapter 11 bankruptcy in Delaware listed more than $10 billion in liabilities, including those from automakers like Honda Motor Co., Toyota Motor Corp. and Tesla Inc., which have claims over the airbags, and people who have brought class action lawsuits.”
“In the U.S. alone, about 43 million air bag inflators are currently subject to recall, and only about 38 percent have been repaired as of May 26, according to data on the U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) website.”
This is a reminder of how important it is to check your vehicle for airbag–and indeed any other recalls–at the NHTSA website.
The NHTSA Vehicle Identification Number (VIN) search tool allows you to access recall information provided by the manufacturer conducting the recall which may not yet be posted on the website.
Finding out fast about safety problems with your vehicles, tires or car seat allows you to get your car repaired (manufacturers are responsible for costs) and to protect you and your passengers.
The National Safety Council and Fiat Chrysler just launched an awareness campaign “Check to Protect” to encourage vehicle owners to make recall checks.
Check out Insurance Information Institute facts and statistics on product recall insurance.
2016 may have been the deadliest year on the roads since 2007, with an estimated cost to society of $432 billion, according to preliminary data released by the National Safety Council (NSC).
“As many as 40,000 people died in motor vehicle crashes in 2016, a 6 percent increase over 2015 and a 14 percent increase over 2014—the most dramatic two-year escalation in 53 years.”
A recent Insurance Information Institute (I.I.I.) white paper on personal auto insurance offered this prescient warning:
“There has been an alarming increase in crashes and claims reported. This, combined with the cost of the claims themselves, has led to a dramatic rise in the overall loss cost.”
Technology is both improving and complicating matters, making vehicles safer but at the same time amplifying possible driver distractions, as discussed in this New York Times article.
The NSC call for life-saving measures, includes:
Extend laws banning all cell phone use – including hands-free – to all drivers, not just teens; upgrade enforcement from secondary to primary in states with existing bans.
I.I.I. tips on how to keep your auto insurance affordable here.
Is Apple liable over a fatal car crash involving FaceTime? That’s the question being asked in a lawsuit filed against Apple by the family of a five-year-old girl killed in a Texas car crash.
Moriah Modisette was killed and her father seriously injured when driver Garrett Willhelm plowed into their car at 65 mph on a Texas highway on Christmas Eve 2014.
As reported by Fortune, Willhelm was chatting on FaceTime at the time of the crash, and the app was still running as rescue workers tried to extricate the injured passengers from the mangled car.
In the lawsuit, the family claims that Apple had failed to install a “lock-out” feature on FaceTime that would prevent drivers from using the app while on the road.
The lawsuit underscores why liability insurance and product liability insurance are important for businesses.
After years of decline in road fatalities, numbers were up 8 percent in 2015. Many believe the rise is due at least in part to distracted driving.
In 2014, 3,179 people were killed in distraction-affected crashes, and 431,000 people injured, according to National Highway Traffic Safety Administration data.
But apps are not all bad. Several app developers are working to create ways to help make your cellphone a tool in the fight against distracted driving, rather than a cause of it.
Check out DMV.org for distracted driving apps that incentivize safe driving by keeping your attention off your phone and on the road.
USA Today reviewed other apps aimed at preventing distracted driving here.
A fatal car accident involving a Tesla Model S in autonomous driving mode is drawing widespread scrutiny both in the United States and overseas.
Joshua Brown was killed in May this year when a tractor trailer made a left turn in front of his Tesla and the self-driving car failed to apply the brakes.
The National Highway Traffic Safety Administration (NHTSA) said it is investigating the incident and will examine the design and performance of the automated driving systems in use at the time of the crash.
Its preliminary evaluation of the incident doesn’t indicate any conclusion about whether the Tesla vehicle was defective, the NHTSA said.
In a blog post, Tesla noted that this is the first known fatality in just over 130 million miles where autopilot was activated:
“Among all vehicles in the U.S., there is a fatality every 94 million miles. Worldwide, there is a fatality approximately every 60 million miles. It is important to emphasize that the NHTSA action is simply a preliminary evaluation to determine whether the system worked according to expectations.”
Tesla further noted that neither Autopilot nor the driver noticed the white side of the tractor trailer against a brightly lit sky, so the brake was not applied:
“The high ride height of the trailer combined with its positioning across the road and the extremely rare circumstances of the impact caused the Model S to pass under the trailer, with the bottom of the trailer impacting the windshield of the Model S.”
As companies continue to innovate and invest in self-driving technology, the crash indicates that fully automated cars are still a thing of the future.
The crash also raises important concerns over regulation.
According to this New York Times article:
“Even as companies conduct many tests on autonomous vehicles at both private facilities and on public highways, there is skepticism that the technology has progressed far enough for the government to approve cars that totally drive themselves.”
And the Wall Street Journal reports:
“Tesla now risks being the test case that could prompt new safety regulations or laws limiting the deployment of self-driving technology.”
The crash also highlights liability concerns regarding this emerging technology. Most car crashes are caused by human error, but presumably the NHTSA investigation will also evaluate potential product liability on the part of the manufacturer.
The crux of the issue is weighing up the risk of crashes versus crashes avoided via the use of self-driving technology.
As the Insurance Information Institute (I.I.I.) notes:
“As crash avoidance technology gradually becomes standard equipment, insurers will be able to better determine the extent to which these various components reduce the frequency and cost of accidents. They will also be able to determine whether the accidents that do occur lead to a higher percentage of product liability claims, as claimants blame the manufacturer or suppliers for what went wrong rather than their own behavior.”
Liability laws might evolve to ensure autonomous vehicle technology advances are not brought to a halt, the I.I.I. adds.