Despite safer cars, drivers on their smartphones have caused too many accidents.
The Wall Street Journal has reported that distracted drivers on their smartphones have caused auto insurance companies to raise rates:
Costs associated with crashes are outpacing premium increases for some companies, and insurers say the use of smartphones to talk, text and access the internet while on the road is a new and important factor behind the wrecks.
It’s “an epidemic issue for this country,” said Michael LaRocco, chief executive of State Auto Financial Corp., at an insurance-industry conference last month.
The companies found evidence in their earnings. Travelers, Hartford Financial Services Group, and Horace Mann Educators found that “[F]ourth-quarter underwriting results for personal auto insurances worsened” due to distracted drivers.
Bill Caldwell, the executive vice president of property and casualty at Horace Mann, said the company will probably “raise rates 8% this year, on top of average 6.5% increases in 2016.”
Companies thought rates would drop since car companies continue to develop better and safer vehicles. The smartphones have ruined that plan:
The number of deadly accidents jumped 7.2% in 2015, according to the National Highway Traffic Safety Administration. A recent report from the nonprofit National Safety Council showed an estimated 6% rise for 2016.
The growing number of wrecks “is swamping the much-heralded beneficial impacts of newer, safer vehicles,” said Robert Hartwig, an insurance professor at the Darla Moore School of Business at the University of South Carolina.
The companies also said that low gas prices have compelled more people to use their cars, which gives drivers more opportunities to use smartphones on the road with more drivers on the road as well.
National studies have not caught up to the data found by the insurance companies, but this has not surprised the executives:
Studies that rely on police reports and observations of passing cars likely undercount the scale of smartphone use because drivers don’t always admit to what they were doing and hands-free devices can’t always be seen from the roadside, said Deborah Hersman, chief executive of the National Safety Council.
The companies have to gather as many details on crashes “involving their policyholders because they need to stay on top of trends that affect profitability.” The agents collect the same information as the police, but “[I]n claims that involve litigation, they may obtain drivers’ phone records.”
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