Can Telematics Help You Sidestep the Accident Trend?
In the first half of 2015, the National Safety Council (NSC) tracked a 14 percent spike in fatal collisions, with an estimated price tag of $152.0 billion. To put it bluntly, we’re looking at the largest percentage increase in traffic deaths in almost seventy years.
So what’s driving the trend? Pete Bigelow, an Auto Blog contributor, chalked it up to low gas prices and a better economy, which have brought “road-trippers, commuters, and motorists of every kind” out in droves.
“More miles driven, more cars on the road, more accidents,” said Tom Wilson of Allstate.
For his part, Warren Buffet blames texting. “If cars are better — and they clearly are — drivers must be worse,” he said. When he said cars are better, he was probably referring to what Yahoo Finance called a “proliferation of newer, safer cars with stability-control systems and air bags.” These safety features, paired with tougher DUI enforcement and the spreading use of seat belts, have been knocking the number of fatal crashes steadily down during the last decade.
The current spike in fatalities flies in the face of that. And unlike economic recoveries of the past (which brought their own boom of drivers on the road), our current recovery is the first to happen in a culture of texting and driving.
The NSC estimated that one in four crashes involves cellphone use, despite ever-toughening legislation. Texting isn’t the only problem. Devices in general – from cell phones to infotainment systems – have made the problem worse.
As for the impacts, major auto insurers are reeling now. Both Geico and Allstate are raising premiums to offset the unexpected costs. Allstate is averaging an increase of 3.9% on its main offering, while Geico is raising rates “as needed.” And according to analysts, these insurers won’t be alone.
Can insurance telematics buck this trend?
Here’s where the story gets interesting. As other major insurers stumble for balance amid the unexpected spike in fatal crashes, Progressive is sitting pretty.
According to Progressive CEO Glenn Renwick, the company has seen an increase in miles driven, but that hasn’t correlated with an increase in claims. Rather, the situation is “very favorable right now.”
Could telematics be their secret weapon? It’s possible. Progressive has been using Snapshot to incentivize safe driving for more than a decade now. As early adopters, they were able to acquire that first wave of best-qualified PHYD drivers. On top of that, those telematics customers have spent years with a strong incentive to fine-tune their habits and practice their skills.
“Progressive may be attracting some of the absolute safest drivers,” said Leslie Scism of Wall Street Journal Money Beat. “So even as the number of miles driven by Americans is up amid a recovering economy and lower gas prices, Progressive’s growing book of Snapshot drivers are good, defensive drivers who leave ample distance between their cars and the ones in front of them to avoid causing wrecks—among other safe driving behaviors when they get behind the wheel.”
That’s exactly the kind of customer every insurer wants in its pool. To learn how to leverage smartphone telematics to attract the best and safest drivers, download our latest “Survive and Thrive” report.