Prior to becoming a well-recognized insurance nerd, I was your run-of-the-mill, de novo nerd growing up in Gainesville. During my high school days in the early ’90s, my favorite band was R.E.M. As evidence of my nerd cred, I along with the few friends I had actually “performed” R.E.M.’s “It’s the End of the World as We Know It” at the Buchholz “Air Band Night” (I remember two things: 1. I memorized every word to a song with nonsensical lyrics in spite of my not actually needing to sing; and 2. We melted faces.) Twenty-seven years later, R.E.M. has retired but the song still comes to mind as I see the trends in commercial auto insurance (check out that bridge, Michael Stipe). Claims numbers are universally crummy among carriers with all trends pointing negative, yet “the end of the world as we know it” may mercifully be around the corner. And, I feel fine.
Believe it or not, I hate it when an insurance company raises rates, and I take great pleasure when I’m able to back a company down to a “flat” or rate reduction offer for a client. This has become increasingly rare, even when it comes to commercial auto coverage. Our insurance agency has access to the vast majority of insurance companies writing coverage, and virtually all of them are hemorrhaging money when it comes to commercial auto. In my opinion, there are three major reasons:
1. Vehicles are becoming more expensive to fix as they become more and more enriched with various technological advancements. According to a 2016 article on PropertyCasualty360, physical damage claim costs are up 17 percent, due in large part to the enhanced electronic components within late-model vehicles.
2. People are becoming more expensive to fix as well. Between the increasing cost of medical care and the preponderance of personal injury attorneys, any auto accident, however small, may be akin to a winning lotto ticket in fact, the cost of bodily injury claims is up 42 percent. But, the most significant factor affecting commercial auto is that drivers are getting worse as they are increasingly distracted by technology. The end of the world, at least in terms of our roads and claims data, is being brought forth by the smartphone. Before you push back on this notion, Dear Reader, I’m not blaming you. I’m sure you have taken advantage of the latest technology so that your phone doesn’t ring or notify you of texts or emails while you’re driving. I’m sure you utilize the hands-free function every time you do have to make an important call (or, better yet, pull over to make any calls), and I’m sure you never fumble with your device while hurtling down the interstate looking for directions, reports of accidents and lurking police or the nearest Chick-fil-A (still maddeningly closed on Sundays). I’m sure you’re not the problem but do me one favor: The next time you’re at a stoplight, watch how many drivers pass through intersections while on their devices. It is scary, and it is unquestionably getting worse.
According to statistics from the National Highway Traffic Safety Administration, 81 percent of drivers admit to talking on a cell phone while driving and there were approximately 336,000 injuries in 2015 attributable to texting while driving. Distracted driving has become the leading factor in auto crashes involving fatal or serious injuries. And, before you rest easy knowing that your company’s driver’s manual requires all drivers to make calls using the hands-free feature of their phones, recognize that simply listening to sentences on a phone call reduces the brain’s parietal lobe activity by 37 percent, thereby impairing the ability to perceive movement and integrate sensory information.
I believe we passed the tipping point long ago when it comes to our addiction to technology and maintaining constant contact through our phones and devices. Amazingly, I believe that my generation has born witness to the greatest sociological change to our species since the creation of the steam engine. Like the steam engine, this technological advance also increases the connectivity of our world. Unfortunately, it also makes us crappy drivers.
As an insurance agent, I can’t see this trend slowing down, barring legislative requirements that will disarm a driver’s ability to consult his or her device while driving. In Florida, we can’t even pass a law that makes texting a primary offense, so this is not the area where my hope rests. I think the more likely “fix” is the arrival of affordable self-driving vehicles. As a father of 11- and 9-year-old daughters, I can only pray that this technology arrives sooner rather than later. Until then, I am telling all of my clients to spend some time with their drivers really addressing the eroding skill of the drivers around them and planning for more dark days ahead when it comes to their auto insurance rates. So, do yourself a favor and download some of R.E.M’s earlier albums to occupy your time in the car. Put the phone down, pay attention to those around you who will not and arrive safe.
