Insurance Companies Use a Slight Increase in “Distracted-Driving” Accidents to Justify a Major Increase in Premiums

Auto Accident
Distracted Driving
Insurance rate increases

By Sean Lally, Staff Writer

According to a recent post by Michigan attorney Steven Gursten, insurance companies are hiking premiums in response to an increase in “distracted-driving” fatalities, a move familiar to injury lawyers who have seen companies make similar claims in the past. However, as Gursten pointed out in his post in late February, the number of fatalities has increased by just .15 percent, which doesn’t quite line up with the premium increases of 6.5 to 11 percent.

There is also very little data to back up claims made by insurance companies like Allstate. According to a recent Wall Street Journal article, Matthew Winter, President of Allstate Corp., “told shareholders this month that the correlation between smartphone ownership and accident frequency is striking.” As Gursten noted, the WSJ reported similar “facts” without any real substantiation to back them.

Companies Attempt to Spin the Story

Gursten wrote in his post 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%.” Additionally, he added that the WSJ has provided “not a single figure” to back up the claim that costs have gone up relative to smartphone related accidents, which according to the WSJ, are “outpacing premium increases.”

To reiterate, according to the National Highway Traffic Safety Administration (NHTSA), distraction-related car crashes resulting in fatality have jumped from 9.76 percent (in 2014) to 9.91 percent (in 2015). That’s an increase of .15 percent, a number that Gursten noted is not proportional to the premium hikes.

Missing Data

The only argument offered by insurance companies is one they’ve used before. It essentially boils down to this: insurance companies have access to more data than organizations like NHTSA that rely on police reports. Companies are incentivized by increased profits to seek out causes of accidents through private investigations. Basically, they have their own data that justifies “hiking auto premiums amid a rise in smartphone-related distracted driving accidents” to quote the WSJ again.

But, as Gursten queried, “if the auto insurance industry knows all of the figures, statistics and numbers, what are they?” And furthermore, he added, why don’t insurance companies release their data to media outlets like the WSJ who attempt to explain the hike in premiums without explaining very much at all. What’s infuriating, according to Gursten, is that the WSJ takes the insurance companies at their word and, in doing so, “expects its readers to do the same.”

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