The Rise of the Distracted Driver; And Why Corporate Auto Insurance Rates Are Going Up
With over 6 million auto accidents occurring annually, many claims managers feel overwhelmed by the number of resulting claims. In this blog post, we’ll discuss distracted driving and potential implications – and provide you with a few tips on how to lower your corporate auto insurance rates.
As automobiles increasingly double as entertainment centers, telephone booths, restaurants and personal grooming boutiques, the demands placed upon claims managers have only increased – and it’s no wonder that corporate auto insurance rates have been going up as well. To continue with the vehicular theme, we can describe the claims department as being the place where the rubber hits the road in an insurance agency following a vehicular accident. Unless significant behavioral change occurs among motorists, auto claims will continue to shuttle into claims departments at a pace best described as fast and furious.
What is distracted driving?
When discussing distracted driving, talking on the telephone and texting quickly come to mind. However, anything that takes the driver’s eyes or even mind off the road counts as distracted driving. This includes using a navigation system, listening to music, drinking a cup of coffee and even daydreaming.
There has been an alarming rise in roadside fatalities
According to an estimate released by the National Safety Council, a nonprofit safety advocacy group, roadside fatalities in 2016 reached 40,200. Not only was this a 6% gain from 2015, it was a 14% gain from 2014. These gains have impacted corporate auto insurance rates. The National Safety Council also released these troubling findings regarding distracted driver behavior:
- 47% of motorists described themselves as being comfortable texting while driving
- 10% of drivers reported driving while drunk
According to the Centers for Disease Control and Prevention, more than 1,000 people each day in the United States are injured in crashes reported to involve distracted driving.
Looking to ways to lower fleet or corporate auto insurance rates?
Analysts working for the National Highway Traffic Safety Administration report the increase in vehicular fatalities can be partially attributed to the fact more people are driving more miles due to the otherwise favorable twin phenomena of job growth and lower fuel prices. In combination with more miles and time spent the road, analysts cite three main causes for the troublingly high number of traffic fatalities:
- Distracted driving was a factor in approximately 10% of auto deaths.
- Almost 50% of the deaths occurred when passengers were not wearing seat belts. This is astonishing, considering it has been more than 30 years since New York State became the first state to pass a law requiring vehicle occupants to wear seat belts.
- Approximately 30% of fatalities involved a drunken driver and/or an excessive rate of speed.
Putting a price tag on auto crashes
The National Safety Council estimated auto crashes cost about $432.5 billion in 2015, including those stemming from motor vehicle deaths, injuries and property damage. To put this staggering price tag into perspective, it equals almost one half of 2016 US Social Security benefit payments.
What rising vehicular accidents means to your corporate auto insurance costs
Corporate auto insurance rates are rising at their fastest rate in more than a decade. Even so, costs associated with crashes are outpacing premium increases for some insurance companies. Although insurance companies are charging more for auto liability, they are making less money. When questioned as to what is causing the spike in auto wrecks, insurers report the use of smartphones by motorists to talk, text and access the Internet as a new and significant factor.
In addition to an increase in the number of wrecks, the rising size of corporate auto insurance claims is affecting several auto insurance companies’ bottom lines. Growing costs for medical care and auto repair are significant contributors to the increasing severity of claims. The rising price of auto parts has also been a contributing factor.
Smart cars are being outsmarted by drivers who are not using their heads
The growing number of accidents “is swamping the much-heralded beneficial impacts of newer, safer vehicles,” according to Robert Hartwig, an insurance professor at the Darla Moore School of Business at the University of South Carolina. Technical advances include rear view cameras, collision-avoidance systems, air bags and anti-lock brakes.
If your company has a fleet of vehicles, or if employees use their own vehicles while on company business, share this information with them before they get behind the wheel and assume avoidable risks. Your company might also consider joining with many other forward-thinking companies by imposing a complete ban on the use of personal devices – both hand-held and hands-free – for employees driving to and from work, or when on company business. Tell them to spend the time figuring out how they can arrive safely at their destinations, so they can go on to determine how your company can better serve its customers, or what your company’s next product or service breakthrough will be.
As a result, safer driving will not only cut costs, it will increase revenue.
Contact us below to have a KMRD Claims Advocate review your Fleet or Corporate Auto Insurance Rates.
Gerry Sorge is a claims advocate providing claims advocacy and insurance claims consulting at KMRD Partners Risk & Insurance Solutions, a leading risk management consulting firm and property-casualty insurance broker based in Warrington, Pa.
Note: This content is provided as general background information and should not be taken as legal advice or financial advice for your particular situation. Make sure to get individual advice on your case from a KMRD risk professional before taking any action.
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