There are several basic steering conditions that ESC works to control: under steer, over steer, and rollover. The condition of under steer — common in icy driving conditions — can best be described as a situation where the vehicle does not turn as sharply as the driver intends. For example, under steer can occur when a driver turns the steering wheel to the left and the car plows forward.

Over steer is just the opposite. It's a condition when the turn is actually much sharper than intended and the rear end of the car swings around. When the system detects a loss of control, braking is automatically applied to individual wheels, such as the outer front wheel to counter over steer or the inner rear wheel to counter under steer.

The third condition that ESC helps prevent is a vehicle rollover. Rollover stability control uses additional sensors to detect an impending rollover. When detected, a rollover is prevented through the activation of an anti-skid system. Rollover stability control systems work on flat pavement and cannot prevent rollovers caused by hitting a curb or sliding into a ditch.

What ESC Means for Insurers

The obvious benefit to mandating ESC by the 2012 model year is an overall reduction in accidents, particularly in single-vehicle rollover accidents, which are the most fatal accident type. Insurers should see a reduction in both collision and bodily injury claims resulting from the mandate, but it may take some time to see the full benefit.

Carmakers face a similar situation in terms of seeing the full benefits of mandatory ESC. Automotive industry experts predict that carmakers will only sell about 11 million vehicles in the U.S. in 2009, and that sales will not recover fully in 2011. But when the market stabilizes and sales return to a more normal rate of 16 million vehicles per year, roughly six percent of the 259 million vehicles on America's roads will be 2012 models with mandatory ESC. Adding the existing vehicles that had ESC as optional equipment still only brings the total amount of ESC-equipped vehicles to about 13 percent of the vehicles on the road. It could take over nine years of normal sales volume before ESC is found on the majority of vehicles driven in the U.S.

While technology normally produces positive progress, it does come at a price — and ESC is no exception. Because of the wheel-speed and steering-angle sensors mounted on vulnerable suspension components, the replacement cost of these items is expensive when damaged in collisions. For example, the cost of some wheel sensors that would likely be damaged if a McPherson strut (a widely used type of car suspension system that uses the axis of a telescopic damper as the upper steering pivot) or wheel hub is damaged can exceed $400. Those increased costs could lead to more vehicles being declared total losses.

In the end, will ESC be a benefit? Absolutely. As with any technology, it will take a quite a few years to matriculate into the full vehicle population. When it does become commonplace, it will reduce accident frequency and save lives. The trade off for the insurance industry is that it may affect physical damage claims by heightening repair costs and increasing total losses. No matter what the cost, in the end, it just may be the most important vehicle safety feature since the advent of the air bag.