Since 2011, nationwide auto-insurance premiums have increased by 16 percent. Today, the average annual rate for one driver is $926.
According to Bloomberg, the country’s largest auto insurers have paid out $1.05 in costs for every $1 worth of premiums. This is in contrast to about a decade ago, when insurers pulled in $1 for every 95¢ they spent on claims. In other words, they used to profit 5¢ on the dollar.
In response to the reversal of this trend, the pace of auto-insurance rate hikes has hit a 13-year high. Obviously, consumers and some regulatory bodies aren’t too pleased. Nevertheless, it appears that the rate increases are in direct response to increasing payouts.
And as for what’s bringing up the claims, experts have their eyes on distracted drivers.
“A sizable percentage of drivers are texting and driving.”
Texting and driving: A recipe for disaster – and higher premiums
It turns out that of all the distractions on the road, none is quite as disruptive as texting and driving. One of the nation’s largest auto insurers noted that 36 percent of its claims stem from incidents involving texting, according to NBC.
Furthermore, a driver doesn’t necessarily have to submit a claim involving texting for rates to increase under that particular plan. Receiving a citation for texting and driving is reason enough to justify a premium hike, even if there was no collision or apparent impedance on the driver’s performance. Think of tickets as the probable cause in the auto insurance world.
Unfortunately, it’s not just the people texting and driving who suffer. In the long run, any person on the road, regardless of their driving record, is more likely to make a claim. With a sizable percentage of drivers texting and driving, the hazard will pervade the entirety of that driver’s surroundings.
Case in point, auto insurers are technically losing money right now.
It may get worse before it gets better
“Digital innovation in automobiles could ultimately put lives at risk.”
Because texting appears to be one of the more significant drivers of rate increases, in theory at least, voice dictation for texting could help save lives by keeping eyes on the road.
However, not everyone is convinced that smarter vehicles are a good idea. One study found that interacting with voice recognition and AI such as Amazon’s Alexa or Apple’s Siri in vehicles is actually more dangerous than talking on the phone. What’s more, automakers haven’t stopped at hands-free texting. Ford and Hyundai, for instance, are currently helping people manage their calendars and shop online using their voice.
The concern here is that the distracted driving will get worse. In addition to increasing the likelihood of claims and raising the average costs of auto insurance, digital innovation in automobiles could ultimately put more lives at risk.
For now, the best thing that drivers can do is avoid using any type of voice dictation technology while their vehicle is in motion – maybe waiting instead until a traffic light. As for any handling of a smartphone behind the wheel, the best rule of thumb is this: If you can’t do something without taking eyes off the road or hands on the wheel, then don’t do it.