Distracted Driving Linked To Losses
Smartphone distracted driving has been the number one reason for skyrocketing automobile accidents over the past year according to State Farm.
On Tuesday, State Farm Mutual Automobile Insurance Co. reported their highest loss in automobile underwriting in history, partly linked to higher smartphone distracted driving accidents. The company reportedly had a net income drop from $6.2 billion in 2015 to $400 million in 2016. Much of State Farm’s loss is due to rising costs on auto insurance claims. Following other auto insurers, such as GEICO and Allstate, State Farm is planning pricing strategy changes to compensate for their unprofitable auto insurance sector.
Even with a $7 billion-dollar loss on auto insurance policies from increased collision claims, many due to distracted driving, the company’s net worth jumped from $82.6 billion to $87.6 billion during 2016. However, State Farm has diversified holdings to offset losses due to underwriting claims. Auto claim losses were recouped from profits in their residential insurance gains, life insurance banking and equity investments.
Smartphone Use Drives Premium Increases
Auto insurance policy holders of State Farm can expect their premium rates to gradually increase throughout 2017 to bridge the gap in State Farm’s extreme underwriting losses. A safety message for drivers has been to refrain from using smartphones and texting while behind the wheel. This push is not only for driver safety, but also for the safety of their passengers and other pedestrians.
Drivers need to focus on the road while driving, not their smartphones. The goal is to reduce 2017 collision report rates. Study’s show a significant number of automobile deaths are directly linked to smartphone use while driving. An alarming amount of auto collision claims resulting from distracted driving accidents, has contributed to the increases in insurance premium costs.
Distracted Driving Stats
According to the US Department of Transportation, “In 2014, 3,179 people were killed, and 431,000 were injured in motor vehicle crashes involving distracted drivers.” Another study involving young drivers under the age of 20, shows 27 percent of the fatal crashes were attributed to distracted driving. Reportedly, 97 percent of teen drivers agree smartphone use and texting while driving is dangerous, yet 43 percent still say they still do it.