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Cell Phones and Insurance Companies

Will Premiums Be Affected in the Future?

Driver safety is a number one priority of the auto insurance industry. Collisions, injuries, and deaths cost the industry millions of dollars each year. Most major carriers now include cell phone safety tips on their websites designed to educate consumers, but what are they missing?

Drivers Aware of Dangers

It’s not as if the driving public is ignorant to the dangers. According to a 2004 survey of Washington drivers by PEMCO Insurance, almost 60% said they used a cell phone when driving. Of all drivers surveyed, almost 70% said they believed using a cell phone when driving is dangerous activity, but clearly only about 10% abstained. So the message is not being missed, there’s just no effective deterrent.

Industry Holds Key to Behavior Modification

What solutions could the insurance industry provide that might encourage drivers to think twice before they dial while driving?

Insurance companies have historically penalized customers with higher premiums. Those smacked with speeding tickets and for other behaviors that lead to unsafe driving, see their insurance costs increase over time. The financial punishment can be stinging and long-lasting. So far, according to Insurance.com, no insurance company as of yet has made premium increases due to cell phone use.

In four states the general motoring public can be ticketed for driving while operating a cell phone manually. And in Washington a motorist can be ticketed for text messaging with a cell phone—now simply called DWT or driving while texting—an extremely distracting behavior not unlike pecking away on a keyboard nearby. Laws that limit driver cell phone use may now make it possible to track driver offenses. Also there is increasing push from the “federal and state highway safety agencies” to convince law enforcement agencies to expand their documentation of collisions. Until now indications of driver distraction as it may have led to a crash have been absent from accident reports. In the future, however, there will likely be more of this kind of evidence added to legal reports. How will the insurance industry respond?

Demographics of Cell Phone Abusers

Already the insurance industry has begun to pull apart the demographics of cell phone users. It could be conjectured that data like this may eventually be used to categorize risk-groups when it comes to unsafe behavior, including cell phone use. PEMCO’s demographics suggest that men use cell phones more often than women when driving, mature adults or those over 55 use cell phones on the road much less than others, and people whose yearly income is over $75,000 are more likely to use a cell phone while driving as well. Other demographic studies show that an alarming number of teens see cell phones as no significant risk when driving, talk on a cell phone when driving, and text message while driving. Their notions of safe and unsafe behavior, some psychologists claim, are learned from parents.

What Do Insurance Companies Believe About Cell Phones?

Insurance companies may be the last segment of the population to jump on board the cell phone legislation bandwagon. Their lack of participation ahs not gone unnoticed. The only company that has even alluded to cell phone distractions is Allstate whose safe driver campaign is the subject of plenty of catchy TV ads. The ad entitled, Multi-Taskers, does not address cell phones directly, but a wide range of commonplace, sometimes ridiculous behaviors that may lead to an accident. Does this mean Allstate considers all distracting behaviors outside of driving as existing on a level playing field?

The Partnership for Safe Driving would like to see use of cell phones banned completely. Furthermore the organization would also like law enforcement to have access to drivers’ cell phone accounts when investigating an accident. In instances where a cell phone was a key factor PSD would like to make drivers financially responsible, not insurance companies.1

  1. Kristin Dizon, “Calls Are Growing for Cell Phone Laws in Cars,” SeattlePi.com, November 17, 2004, http://seattlepi.nwsource.com/local/199984_celllaws17.asp

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