Tag Archives: Auto

Learning from Lohan

I regularly tell friends there’s always an insurance angle, no matter the event. And so it is with Lindsay Lohan’s latest fall from grace.

As Lohan’s jail time continues to fuel the news headlines, our colleagues at the Insurance Information Network of California (IINC) remind us that we can learn from Lohan’s mistakes, at least from the insurance perspective.

As reported by Insurance Journal, IINC has determined the average insurance premium difference Lohan could pay for auto insurance because of her risky behavior based on her profile, ZIP code, vehicle model and current record of two DUIs and an at-fault car accident.

A single, 24-year-old female who lives in the Beverly Hills ZIP code of 90210 (Lohan lives in a condo in West Hollywood) and drives a 2009 Mercedes SL550 convertible would have access to 100 percent of the insurers offering auto coverage in California, according to IINC.

With a clean driving record, Lohan would pay approximately $2,075 every six months for a full coverage policy. But with an at-fault accident and two DUIs on her driving record, the six month premium would more than triple to $7,408.90.

That’s an annual premium of nearly $15,000.

Lohan would also only have access to less than 10 percent of the companies in California offering auto coverage, because most of the major insurers in the state would consider her too great a risk. IINC says it’s likely she would have to purchase coverage for bad drivers through the Department of Insurance.

I.I.I. research indicates the average American driver spends about $850 a year on auto insurance. The better your driving record, the lower your premium.

IINC’s Pete Moraga sums up the situation:

“If we take risks and make bad decisions, our insurance will be much more expensive.”

Check out this I.I.I. video offering five tips on saving money on auto insurance.

Fourth of July Dangers

Turns out the Fourth of July holiday can be a dangerous one. Before you head out to enjoy the barbecues and fireworks, consider the following.

The Fourth of July is the most dangerous holiday for drivers, according to State Farm Mutual Automobile Insurance Company. The Hartford Courant’s Insurance Capital blog reports that over the past five years an average 6,031 collision claims have been made by State Farm policyholders nationwide on July 4.

By way of comparison,  New Year’s Day saw 5,403 collision claims and Memorial Day 5,321 claims over the same five-year period.

Similarly, the Insurance Institute for Highway Safety (IIHS) reports that July 4 is one of the days with the highest number of crash fatalities. From 2004 to 2008 there were about 148 crash deaths each July 4, compared with 114 on a typical day.

Check out I.I.I. facts and stats on highway safety for more information.

Have a safe and happy holiday!

Car Thefts Down But Staged Accidents Up

A bit of good and bad news in latest reports on auto theft and staged auto accidents from the National Insurance Crime Bureau (NICB). First the good: the NICB says 2009 marked the sixth consecutive year of declining vehicle thefts in the United States.

For 2009, the 10 Metropolitan Statistical Areas (MSA) with the highest vehicle theft rates are: Laredo, TX; Modesto, CA; Bakersfield, CA; Stockton, CA; Fresno, CA; Yakima, WA; San Francisco/Oakland/Fremont, CA; Visalia/Porterville, CA; Las Vegas/Paradise, NV; and Albuquerque, NM.

Some 83 percent of the 366 MSAs within the U.S. reported lower thefts than they experienced in 2008 and once the final figures for 2009 are available vehicle theft may drop as much as 19 percent on 2008, according to NICB.

Now for the bad news: staged accidents. The NICB says so-called staged accident questionable claims (QCs) increased 46 percent from 2007 through 2009. The ratio of staged accident QCs to overall bodily injury (BI) and personal injury protection (PIP) claims also increased over this period.

The five cities that generated the most staged accident QCs were: New York City – 1,304; Tampa – 562; Miami – 511; Orlando – 422; and Houston – 376.   Notice that Florida and New York, which are no-fault (or PIP) states, dominate the top loss locations.

NICB has created a series of videos demonstrating some of the most common types of staged accidents, available here. Check out further I.I.I. information on auto theft and no-fault auto insurance.

Hospital Cost Shifting Hits Auto Insurers

There’s been a lot of talk about how the property/casualty insurance sector may be affected by landmark healthcare legislation enacted by Congress last month. One of the concerns among p/c insurers is cost shifting. A new study from the Insurance Research Council (IRC) shows that hospitals have been shifting costs to auto insurers for some time because of low reimbursements from public health insurance programs, such as Medicare and Medicaid. This raises auto injury claim costs and forces auto insurers to more closely scrutinize and negotiate hospital bills prior to payment.

According to IRC estimates, in 38 tort and add-on states, cost shifting for bodily injury claims in 2007 resulted in $1.2 billion in excess hospital charges. However, the full impact of hospital cost shifting, including that occurring in other insurance coverages and in other states, may be much greater. Over to Elizabeth Sprinkel, senior vice president of the IRC:

The conventional wisdom is that hospitals aggressively seek to shift costs from public insurance programs to private payers such as auto insurance companies. With this study, we now have information on the magnitude of cost shifting and a better understanding of the need for supportive state laws and effective tools that will enable auto insurers to pay hospitals appropriately and help control auto injury claim costs.†

Hospital cost shifting to auto injury claims also illustrates the complex relationship between p/c insurance and the broader healthcare and insurance system, according to Sprinkel:

Healthcare legislation enacted by Congress last month underscores the complexity of this relationship. It will take months, if not years, to understand the full impact of the reforms on hospital cost shifting and the auto insurance system.†

To explore the relationship between key health system features and auto injury hospital costs, IRC developed a statistical model of average hospital charges for auto injury claims in different states. Key predictors of average hospital charges confirmed by the model are the percentage of a state’s population without health insurance coverage and the percentage of the population covered by Medicaid. To estimate excess hospital charges due to hospital cost shifting, IRC compared average hospital charges for BI liability claims in Maryland with average charges in 38 other tort and add-on states. Some 22 insurers, representing 58 percent of the private passenger auto insurance market in the United States in 2006, participated in the study. Check out I.I.I. facts and stats on auto insurance.

†¢ On a separate note, we’re honored to have been named a top 50 hospital administration blog by Hospitalicious in the “Health Insurance and Disease Management† category.

Traffic Fatalities: Steady Decline

Safer roads and vehicles appear to be contributing to what has been a steady decline in U.S. highway deaths since they reached a near-term peak in 2005. Preliminary statistics from the National Highway Traffic Safety Administration (NHTSA) estimate that 16,626 people died in motor vehicle crashes in the first half of 2009, down 7 percent from 17,871 fatalities in the first half of 2008. The fatality rate (the number of deaths per 100 million vehicle miles traveled) also dropped to 1.15 in the first half of 2009, down from 1.23 in the first half of 2008. A New York Times article by Matthew Wald notes that the recession and high gas prices may also have helped a bit. Preliminary data reported by the Federal Highway Administration (FHWA) shows that the number of vehicle miles traveled in the first half of 2009 declined by about 0.4 percent, or 6.1 billion miles. Improved seat belt use is  another  contributing factor. Check out I.I.I. info on highway safety.

Deer-Vehicle Collision Frequency Jumps

The number of vehicles on U.S. roadways has grown by 7 percent over the last five years, but the number of times those vehicles have collided with deer has jumped by 18.3 percent. In its latest study of annual deer claims, State Farm estimates 2.4 million collisions between deer and vehicles occurred in the U.S. during the two-year period between July 1, 2007 and June 30, 2009. Among the 35 states where at least 7,000 deer-vehicle collisions occur per year, New Jersey and Nebraska posted the largest increases of 54 percent. Deer-vehicle collisions also jumped by 41 percent in Kansas, by 38 percent in Florida, Mississippi and Arkansas, by 34 percent in Oklahoma and by 33 percent in West Virginia, North Carolina and Texas. For the third year in a row, West Virginia tops the list of those states where a collision with a deer is most likely. State Farm puts the chance of a West Virginia vehicle colliding with a deer in the next 12 months at 1 in 39. Michigan (1 in 78) remains second on that list followed by Pennsylvania (1 in 94), Iowa (1 in 104) and Montana (1 in 104). The state in which deer-vehicle collisions are least likely is still Hawaii (1 in 9,931). The average property damage cost of these incidents was $3,050, up 3.4 percent from a year ago. Check out I.I.I. tips on avoiding deer-vehicle collisions.

Distracted Driving Summit

The U.S. Department of Transportation has announced the schedule for its two-day distracted driving summit that takes place Wednesday and Thursday of this week. Panelists will discuss a range of issues including: the extent of driver distraction; research results on the nature of the distracted driver problem; how technology is both contributing to and can prevent the consequences of distraction; proposed legislative and regulatory approaches to address distracted driving; and initiatives to increase public awareness of safety issues. Participants include Adrian Lund, president of the Insurance Institute for Highway Safety. One of the issues to be discussed is how proposed federal legislation would address cell phone use by bus and truck drivers. According to an article in today’s New York Times by Matt Richtel, the trucking industry says on-board computers that hundreds of thousands of truckers on U.S. roads use for directions and to stay in contact with dispatchers can be used safely and are less distracting than Blackberrys and iPhones, and truckers should be exempt from laws prohibiting texting while driving. However, research by the Virginia Tech Transportation Institute cited in the article found that those truckers who use on-board computers faced a 10 times greater risk of crashing, nearly crashing or wandering from their lane than truckers who did not use the devices. Check out I.I.I. information on cell phones and driving.

IIHS Celebrates 50th Anniversary

There were 6 percent fewer highway deaths in 2008 than in 1960 despite the fact that last year there were nearly three times as many licensed drivers, four times as many cars and ten times as many miles driven than in 1960, according to I.I.I. president Dr. Robert Hartwig. His comments came in a keynote speech on the occasion of the 50th anniversary of the Insurance Institute for Highway Safety (IIHS). Dr Hartwig noted that IIHS has been on the vanguard in highway and automobile safety for half a century. “Without exaggeration, over the past 50 years, hundreds of thousands of lives have been saved and millions of injuries avoided—or their severity lessened—in whole or in part because of the fine work of this institution,† Hartwig said. While for most of its first 50 years IIHS got its message out primarily through television and the print media, the institute is now competing successfully in the age of the Internet. Hartwig said presently there are: 6.1 million references to the IIHS on the Internet based on a Google search; nearly 52,000 other web sites linking to iihs.org; and 1,640 IIHS crash test videos on Youtube. Check out I.I.I. facts and stats on highway safety.

Cash for Clunkers

Guidelines on how to meet the auto insurance requirements under President Obama’s Car Allowance Rebate System (CARS), also known as the “Cash for Clunkers† program are expected to be available today at www.cars.gov. Administered by the National Highway Traffic Safety Administration (NHTSA), the program helps people purchase a new, more fuel efficient vehicle when they trade in a less fuel efficient vehicle. Depending on the difference in fuel economy between the new vehicle and the trade-in vehicle, people will get a credit of between $3,500 and $4,000 to help pay for the new vehicle. An important feature of the program is that the trade-in vehicle must have been registered and continuously insured for the past year. Check out I.I.I. facts and stats on auto insurance.