Latest crash statistics from the U.S. Department of Transportation’sÃ‚ National Highway Traffic Safety Administration (NHTSA) highlight two contrasting tales. The good news is that safer vehicles and aggressive law enforcement appear to be paying off, with the overall number of traffic fatalities in the U.S. in 2007 declining by 3.9 percent to 41,059. This reduction is the largest in terms of both number and percentage since 1992. In addition, the fatality rate per 100 million vehicle miles traveled fell to a historic low of 1.37. However, motorcycle safety continues to be a problem. According to NHTSA, motorcycle fatalities now account for 13 percent of all fatalities. In 2007 alone, the number of motorcycle riders or passengers killed on the nationÃ¢â‚¬â„¢s roads increased 6.6 percent over the previous year while the number of injured increased by 17 percent. Check out further I.I.I. info on motorcycle crashes.Ã‚
An increasing number of insurance buyers are purchasing auto insurance online. The J.D. Power and Associates 2008 Insurance New Buyer Study finds that the 44 percent of buyers who bought auto insurance from a new insurer did so via direct channels (including insurer Web sites and call centers), a 3 percent increase on 2007. Among buyers who changed their shopping channel, more buyers also changed to direct purchasing methods (22 percent), compared with those who switched to using an agent (15 percent). However, the study also finds that buyers who purchase their auto insurance via local agents give significantly higher average satisfaction scores, compared to those who buy direct. Despite this, J.D. Powers notes that insurers are enhancing their Web site capabilities and that most prospective buyers cite the ease of shopping via a direct channel. Erie, The Hartford and State Farm areÃ‚ the top three ranking companies among 18 major auto insurers in satisfying new buyers.Ã‚
There was some good news for auto owners and their insurers yesterday. The National Insurance Crime BureauÃ¢â‚¬â„¢s (NICB) 2008 Hot Wheels study indicates that auto theft is continuing its national decline. Based on preliminary FBI Uniform Crime Report (UCR) data, motor vehicle theft is headed for an 8.9 percent decrease in 2007. This would make it the fourth consecutive year of decline and follows a 3.5 percent decline in 2006. Final data will be released later in the year. Check out further I.I.I. info on auto theft.
Even though 98 percent of Americans claim to be safe drivers, nearly three-quarters (72 percent) admit to engaging in some kind of distracting behavior while driving, from cell phone use to eating. The apparently contradictory finding comes in the second annual DWD study from Nationwide Insurance. While technological advances have improved driving safety in many areas, this is one where too much technology can be a bad thing. According to Nationwide, nearly half (48 percent) of drivers consider cell phone use and other technology to be the most dangerous distraction. Availability of technology was cited by 35 percent as the reason DWD is so common today. Texting while driving is also a growing problem. ItÃ¢â‚¬â„¢s also a question of mindset, according to Nationwide. Almost two-thirds of drivers who own cell phones said their colleagues, friends and families expect them to be available by cell or other electronic communication devices at all times. Check out further I.I.I. info on auto crashes.Ã‚
WeÃ¢â‚¬â„¢re again seeing an uptick in interest on the issue of accident response fees. Such fees can appear an attractive alternative to raising local taxes for budget-constrained municipalities. In short, some municipalities are attempting to bill insurance companies for police or fire department responses to auto accidents. This practice is a growing trend in a number of Midwestern states, including Michigan, Ohio and Wisconsin, as well as other states like Kentucky and Florida. Indeed, several cities and municipalities have passed ordinances permitting the collection of such fees. In some cases, third party fee companies are encouraging the practice by soliciting municipalities for the collection of accident response fees.
We note that the response to and investigation of auto accidents has long been handled by police and fire departments, supported by local taxes. Such response services have never been covered or charged for in auto insurance policies. If insurers are to be expected to pay for services historically supported by local taxes, then going forward this additional cost component will have to be factored into auto insurance policies. For more information, check out the I.I.I. primer on municipal accident response fees. Further resources are available at www.accidenttax.com and www.accidentresponsefees.comÃ‚
This week has been an interesting one in the auto manufacturing world. First we had General MotorÃ¢â‚¬â„¢s announcement that driverless cars will be on the roads within the decade. Then, yesterday Tata Motors of India unveiled the worldÃ¢â‚¬â„¢s cheapest car, the Nano, which will go on sale in India later this year for 100,000 rupees (thatÃ¢â‚¬â„¢s around $2,500). Apparently GM plans to test its driverless car technology by 2015 and have cars in production by 2018. Imagine being able to switch to driverless mode on highways and instead send that email? GM claims the technology could improve congestion and safety, as well as addressing energy and emissions. TataÃ¢â‚¬â„¢s Nano is more of a no-frills concept, with no trunk, airbag or passenger-side mirror. The cheapest versions of the vehicle will forego air-conditioning and power steering. Such technological developments could transform our driving future, but obviously they raise issues related to regulations, liability laws, privacy, the environment and insurance. What do you think?Ã‚
A record 38.7 million Americans will travel 50 miles or more from home over the Thanksgiving holiday period beginning tomorrow, up 1.5 percent on last year, according to the AAA. Despite record high gas prices, some 31.2 million motorists are expected to hit the road for Thanksgiving, a 1.3 percent increase on last year. Another 4.7 million will travel by air and the remainder by train, bus or other transportation. With that in mind, we note a study just completed by Farmers Insurance. Once again, it finds that seat belts remain the most important protection for drivers. Based on 2006 fatal crash data from the U.S. Department of Transportation, Farmers found that when a driver used a seat belt, the odds of fatality dropped nearly 70 percent compared to a driver who did not. Its analysis incorporates a logistic econometric model with 41 variables, accounting for factors such as road and traffic conditions at the time of the accident, location and time, accident events, vehicle specifics, driver demographics, and safety features. So as you head out for the holiday, remember to buckle up! Have a safe and happy Thanksgiving.
Safer cars are just one of the factors contributing to a downward trend in auto insurance premiums. Awards announced this week by the Insurance Institute for Highway Safety (IIHS) confirm a continuing trend of safer vehicle designs. A total of 34 vehicles earned the IIHS top safety pick award for 2008, close to triple the 13 models that qualified at the start of the 2007 model year. IIHS noted that 10 additional vehicles qualified during the year as manufacturers made changes and introduced new designs. Another 11 vehicles have been added to the list for 2008. The award recognizes vehicles that do the best job of protecting people in front, side and rear crashes based on ratings in the InstituteÃ¢â‚¬â„¢s test. Winners also have to be equipped with electronic stability control (ESC). IIHS research indicates that ESC reduces the risk of fatal single-vehicle crashes by 56 percent and fatal multiple-vehicle crashes by 32 percent. Many single-vehicle crashes involve rolling over, and ESC reduces the risk of fatal single-vehicle rollovers by 80 percent (SUVs) and 77 percent (cars). Check out I.I.I. facts & stats on highway safety.Ã‚
Cars and deer can be a lethal combination, particularly during deer migration and mating season which generally runs from October through December. A State Farm study of annual deer claims data from 2006 to 2007 and motor vehicle registration counts by state from the Federal Highway Administration, highlights the growing frequency and cost of deer/vehicle collisions. The upshot is that West Virginia is the leading state by frequency. State Farm estimates the chance of a West Virginia vehicle colliding with a deer in the next 12 months at 1 in 57. ThatÃ¢â‚¬â„¢s three times more likely than one estimate of the possibility that a person will be audited by the Internal Revenue Service in 2008 and 5,000 times more likely than the chance that an individual will be struck by lightning in the next year, according to State Farm. Michigan (1 in 86) is second on the list of states where deer/vehicle collisions are most frequent, followed by Wisconsin (1 in 99), Pennsylvania (1 in 100) and Iowa (1 in 109). State FarmÃ¢â‚¬â„¢s data also shows that the total number of deer/vehicle collisions in the U.S. has increased 6.3 percent over a year ago. The average property damage cost of these incidents also increased by 3 percent to just under $2,900.Ã‚
So Columbus Day brings some good news and not so good news for auto owners and their insurers. Vehicle thefts have declined for the third year in a row, according to the National Insurance Crime BureauÃ¢â‚¬â„¢s (NICB) Hot Wheels study. The headline stats are 1,192,809 motor vehicles reported stolen in 2006, some 42,417 fewer than in 2005. ThatÃ¢â‚¬â„¢s one vehicle every 26.4 seconds. Based on the FBIÃ¢â‚¬â„¢s average valuation of $6,649 per stolen vehicle, this amounts to over $7.9 billion in losses just in vehicle value alone for 2006. But the other side of the coin is that only 59 percent of stolen vehicles were recovered last year — the lowest recovery rate in over a decade. More than 700,000 vehicles remain outstanding, which as the NICB points out, fuel a number of related insurance fraud and vehicle theft activities. Exports of stolen vehicles to foreign countries are part of the problem. In 2006, over 4,000 vehicles valued at nearly $42 million were returned to the U.S. from various countries. A trend to monitor.Ã‚ NICB’s advice to owners is to take a layered approach to theft prevention, and that doesnÃ¢â‚¬â„¢t have to be costly. The cheapest form of defense? Locking your car and taking your keys. Warning devices, immobilizing devices, and tracking devices are other effective tools. I.I.I.’s auto theft update has more details.