Smartphone addicts driving car insurance rates higher
Distracted by their smartphones, America’s drivers are becoming more dangerous by the day. And as The Wall Street Journal reports, their behavior is pushing auto-insurance rates even higher as insurers struggle to keep up.
Costs associated with crashes are outpacing premium increases for some companies, and insurers say the use of smartphones to talk, text and access the internet while on the road is a new and important factor behind the wrecks.
It’s “an epidemic issue for this country,” says Michael LaRocco, chief executive of State Auto Financial Corp., at an insurance-industry conference last month.
State Farm Mutual Automobile Insurance Co., the largest U.S. auto insurer by market share, says 36% of the people it surveyed in 2015 admitted to texting while driving, and 29% said they access the internet, compared with 31% and 13%, respectively, in 2009.
State Farm’s survey found that 52% of respondents in 2011 owned a smartphone, and 88% owned one in 2015.
The connection between phones and collisions surfaced in insurers’ earnings. Fourth-quarter underwriting results for personal auto insurance worsened at Travelers Cos., Hartford Financial Services Group, and Horace Mann Educators, and all three said distracted driving was partly to blame. The three companies insure millions of vehicles across the U.S.
“Distracted driving was always there, but it just intensified as more applications for the smartphones became available,” said Bill Caldwell, executive vice president of property and casualty at Horace Mann, in a recent interview. The insurer expects to raise rates 8% this year, on top of average 6.5% increases in 2016.