Distracted Driving: The Auto Insurance Industry’s $30 Billion Elephant in the Room

Research shows that one in four car crashes is caused by phone-related distracted driving. However, a recent LifeSaver study reveals this figure to be a vast understatement. Specifically, more than 60% of agents responded that half or more of all claims are now related to distracted driving. It’s downright scary to think about the injuries, property damage and loss of life that results from distracted driving.

But what’s often overlooked when talking about the human risks of distracted driving is the financial impact of this epidemic. Bearing the brunt of this cost is the auto insurance industry – to the tune of $30B a year, based on the one-in-four figure noted above. But if our survey bears out on a national scale, the full cost could be north of $60B. And of course this cost is passed on to drivers in the form of increased premiums. In fact, we’re already seeing some major insurers (GEICO, Allstate and Zurich) publicly conceding that they are feeling the pain from this fast-growing epidemic.

Assuming the annual cost to insurance companies ranges from $30B to $60B – a mere 10% reduction in distracted driving accidents using LifeSaver would save insurance carriers several billion dollars annually.

The infographic below highlights the cost of distracted driving to the insurance industry. It also offers some insight into the minds of insurance agents receiving these claims, as well as the habits of today’s distracted drivers. Take a look and let us know your thoughts in the comments below.

 

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About Ted Chen

Co-founder, LifeSaver http://www.lifesaver-app.com With two decades of experience in Silicon Valley, Ted Chen is recognized as a leader in building strategic partnerships for technology companies. Chen’s latest venture – LifeSaver – seeks to curb the human cost of distracted driving, while giving insurance companies powerful tools to encourage responsible driving among their policyholders. Prior to LifeSaver, Chen held executive-level positions at YouSendIt, Yahoo!, Netcentives and AOL/Netscape.
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