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Are car insurance companies using distracted driving as the ‘boogeyman’ to justify rate hikes?

Despite small increase in fatalities from distracted-driving car accidents & lack of ‘costs’ data, auto insurers impose premium increases of 6.5% to 11%

distracted-driving

Are car insurance companies using distracted driving as the “boogeyman” to justify their past, present and future rate hikes?

You bet they are. It’s a tune we’ve heard before from the insurance industry. Just like they’ve used injury lawyers and lawsuits in the past to justify big rate hikes and legislative changes to the auto law in Michigan, they’ve found a new boogeyman to blame for big hikes in rates.

I am not downplaying the dangers of distracted driving. As an auto accident attorney, I’ve seen distracted driving play an increasing and prominent role as the cause of many of the automobile accidents I litigate. But the data doesn’t justify the big jump in car insurance rates that we’re seeing from the insurance companies. Fatalities from distracted-driving-related automobile accidents (as a percentage of total auto accident fatalities) have increased a mere .15 percentage points (from 9.76% to 9.91%).

Yet, auto insurance companies are using that .15 percentage-point increase to somehow justify premium increases of 6.5% and 11% and future increases of 8%, according to the Wall Street Journal.

In a jaw-dropping example of public-relations spin masquerading as news (something we’re seeing a lot of these days), the WSJ – in an article entitled, “Smartphone addicts behind the wheel drive car insurance rates higher” – threw the auto insurance industry’s agenda into high gear by reporting as fact:

  • “Insurers increasingly blame distracted drivers as costs related to crashes outpace premium increases.”
  • “Insurance companies are hiking auto premiums amid a rise in smartphone-related distracted driving accidents.”
  • “Costs associated with [distracted-driving-related] crashes are outpacing premium increases for some companies, according to insurers …”
  • “Car-insurance rates are going up … because Americans are driving more … and they’re getting in more accidents … which is leading to higher payouts by insurers … and insurers say the rise in smartphone ownership correlates with the rise in accidents.”
  • “The connection between phones and collisions is surfacing in insurers’ earnings.”
  • “At Allstate Corp., President Matthew Winter told shareholders this month that the correlation between smartphone ownership and accident frequency is striking.”

There’s only two “small” problems with all that:

  • All the spin in the world can’t mend the broken logic behind the idea that such a small increase in the number of wrongful deaths from distracted-driving car accidents can generate insurance claim “costs” that would justify rate increases of 6.5%, 8% or, even 11%.
  • The WSJ, the country’s premier business newspaper, doesn’t report anything – not a single figure – about the “[c]osts associated” with the “rise in smartphone-related distracted driving accidents” that are supposedly “outpacing premium increases” for the auto insurance companies. Instead, the WSJ takes the insurance industry’s word for it – and expects its readers to do the same.

Fatalities from automobile accidents caused by distracted driving

So how significant is the “rise in smartphone-related distracted driving accidents” that car insurance companies feel the need to “hik[e] auto premiums” for consumers?

Well, according the to the WSJ’s own reporting, nowhere near as significant as one might think.

Accurately, the WSJ reports:

“In the latest federal analysis available, the NHTSA attributed distraction of all types—reaching for a dropped item, attending to children in a back seat or eating—to 9.9% of all traffic fatalities in 2015 compared with 9.8% the year earlier.”

According to NHTSA’s August 2016, Traffic Safety Facts – Research Note, “2015 Motor Vehicle Crashes: Overview,” which provides the most current, up-to-date information on the issue:

“Fatalities in distraction affected crashes increased from 3,197 [in 2014][out of a total 32,744 “motor vehicle traffic fatalities”] to 3,477 [in 2015][out of a total 35,092 “motor vehicle traffic fatalities”], or 8.8 percent.”

Put another way, as a percentage of the total number of fatalities resulting from automobile accidents, the number of “fatalities in distraction-affected” car accidents increased from 9.76% in 2014 to 9.91% in 2015 – an increase of .15 percentage points.

Auto insurance premium increases caused by the distracted-driving ‘boogeyman’

Saying that “distracted driving was partly to blame,” Horace Mann “expects to raise rates 8% this year on top of average 6.5% increases in 2016,” reported the WSJ.

Additionally, after noting that Allstate’s President “told shareholders this month that the correlation between smartphone ownership and accident frequency is striking,” the WSJ reported that “Allstate drivers’ average auto bill is up by more than 11% since 2014.”

Are there real costs associated with distracted driving car accidents? Take our attorneys’ word for it

Even though the so-called increasing “costs related to” distracted driving car accidents is the foundation for its story – and the insurance industry’s spin job to justify the big jump in rates  – the WSJ doesn’t include in its article a single financial figure to back up its claim that the “costs related to [distracted driving] crashes outpace premium increases.”

That’s really the key. Yes, distracted driving is causing car accidents. But are the costs of distracted driving high enough to justify the big jump in premium increases?  The auto insurance industry is using the same playbook they’ve used in the past with lawyers and lawsuits, as we see the industry’s “trust us” parade of excuses without data:

“Insurance executives and safety experts say they aren’t surprised national studies don’t capture the full smartphone-related distracted-driving problem. 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. Car insurers, on the other hand, have an incentive to quickly gather detail about wrecks involving their policyholders because they need to stay on top of trends that affect profitability. They don’t break out distracted-driving trends in rate-increase requests filed with state insurance departments, actuaries said. The alarms being sounded by the industry are based partly on internal investigations to determine causes of policyholders’ crashes. In costlier wrecks, many insurers collect police reports, witness statements and their own drivers’ accounts, executives said. In claims that involve litigation, they may obtain drivers’ phone records, they said.”

Of course, this all begs the obvious questions:

  • So if the auto insurance industry knows all of the figures, statistics and numbers, what are they?
  • Why isn’t the industry releasing them? Especially to the trusted WSJ for a story that tries to explain their otherwise inexplicable jacked-up auto insurance prices?
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