Showing posts with label auto insurance. Show all posts
Showing posts with label auto insurance. Show all posts

Thursday, November 14, 2013

Insurance industry worries about older drivers with smartphones

In any conversation about distracted driving – especially texting behind the wheel – it is almost always in the context of youthful drivers. After all, they're the ones addicted to their smartphones, right?

Not so fast. Increasingly it appears that a growing number of those heads glancing down at smartphone screens behind the wheel have gray hair. Older drivers are quickly catching up with young drivers when it comes to staying connected while driving.

And it's not just texting. A July 2013 survey by State Farm Insurance found a big jump in the percentage of drivers who own smartphones, particularly among drivers age thirty and older. At the same time the percentage of drivers who access the Internet on their phone while driving has nearly doubled over the past five years, going up from 13% in 2009 to 24% in 2013.

More hands-free talking

The survey results also showed the use of hands-free cell phones while driving has increased, while the percentage of people talking on a hand-held cell phone or texting while driving has become stagnant over the past three years.

This may be due, in part, to the growing number of new cars that have a Bluetooth connection. With this system, a driver may answer a call and carry on a conversation simply by pushing a button on the steering wheel, without removing the phone from a pocket or a purse.

While there has been research that suggests talking on a hands-free phone is also distracting, the same could be said for a driver conversing with passengers. It's all a matter of degree. But it's the growing presence of electronic gadgets among drivers that keeps insurance agents up at night.

Multiple distractions

"As smart phone ownership increases for all age groups, the safety community must ensure we are keeping pace with our understanding of the types of distractions drivers face," said Chris Mullen, Director of Technology Research at State Farm. "Much attention is paid toward reducing texting while driving, but we must also be concerned about addressing the growing use of multiple mobile web services while driving."

While 86% of drivers age 18-29 have smartphones, the new data shows 64% of drivers age 50 to 64 do as well, a 20% jump in two years. Even 39% of drivers 65 and older now have smartphones, the survey found.

Distracted driving is a major concern for the insurance industry, which profits when there are fewer accidents. But while most concede that texting while driving is very dangerous, it's less clear that simply talking and driving is.

Questioning conventional wisdom

Another study from Carnegie Mellon University and the London School of Economics and Political Science, also conducted this year, finds that talking on a phone while driving does not increase the risk of a crash.

For the study, Carnegie Mellon's Saurabh Bhargava and the London School of Economics and Political Science's Vikram S. Pathania examined calling and crash data from 2002 to 2005, a period when most cell phone carriers offered pricing plans with free calls on weekdays after 9 p.m. They compared data from mobile network operators and accident reports and found that there was no direct correlation between the number of phone calls made during a certain time period and the number of crashes during the same time.

"Using a cell phone while driving may be distracting, but it does not lead to higher crash risk in the setting we examined," said Bhargava, who is an assistant professor of social and decision sciences at CMU. "While our findings may strike many as counterintuitive, our results are precise enough to statistically call into question the effects typically found in the academic literature. Our study differs from most prior work in that it leverages a naturally occurring experiment in a real-world context."

For its part, State Farm is encouraging government agencies to continue their high profile campaign against distracted driving, which specifically targets electronic gadgets.

"State Farm continues to support a multi-pronged approach to encouraging more engaged driving," Mullen said. "Legislation, enforcement, education and technology all have a role to play in making our roads safer for all who share them."

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Source: Consumer Affairs (Huffman, 11/13)

Monday, July 29, 2013

Car Insurance Rates Are Higher Based On Education, Report Says

People may be paying higher auto insurance rates if they didn’t go to college or work blue-collar jobs, according to a new report from the Consumer Federation of America (CFA)

The CFA found major auto insurance companies like GEICO, Farmers, Liberty Mutual, and Progressive charge higher rates from drivers who only have a high school diploma or a lower-status job.

Liberty Mutual, for example, charges a high school graduate 10 to 13 percent more that a college graduate, according to the report.

Companies must be doing this for a reason, but the CFA doesn’t offer any. It is unclear how education and occupation affects the level of risk involved when driving a car. Do people with less education or lower-level jobs get into more accidents? If that’s the case, then why don’t other companies like Travelers, USAA, State Farm, and Allstate use education or work status to calculate their rates? There could be a trade-off, like taking into consideration claim history, credit score, and whether the company also insures your house, business, etc., instead.

A 2012 survey showed the majority of American consumers believes using occupation or education to set rates is unfair.

CFA says it is working to stop the discriminatory factors used in calculating auto insurance premiums. The group seems to assert that giving auto quotes based on occupation is akin to a quote based on race.

“The American public knows that it is unfair for auto insurers to use factors like education and occupation in setting rates,” said J. Robert Hunter, CFA’s Director of Insurance, a former Texas Insurance Commissioner and former Federal Insurance Administrator. “In effect, auto insurers are discriminating on the basis of income and race. States should prohibit the use of these demographic factors that bear no logical relation to insurer risk.”

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Source: Opposing Views (Fruchtnicht, 7/28)