The automotive world is abuzz with advances and innovations in automated and connected vehicles. Consumers are flooded with images of cars and trucks driving themselves, effortlessly, while the occupants enjoy the ride. But beyond the neon lights of that futuristic vision, there is a harsh reality: America's roads are becoming treacherous. National Highway Traffic Safety Administration (NHTSA) crash research indicates an increased number of accidents, injuries and deaths on U.S. roads in the post-recession years. Economic activity and miles traveled were down during 2008-2009, but once the economy rebounded, vehicle miles traveled picked back up. Both fatal and non-fatal crashes also are trending upward. |

The carriers' perspective

Such unpleasant surprises on the roads impact not just accident victims and their families, but also insurance companies and consumers in general. According to the National Association of Insurance Commissioners (NAIC), since 2011, auto loss ratios have consistently risen, diverging from the overall improvement experienced through of the P&C industry. So far for the industry, 2016 seems to be the worst performing year to date. Rising fatality and injury rates explain only a part of overall auto insurance losses. After all, total losses are determined by both a higher number of claims as well as larger claim values. Still, these accident trends are worth a second glance, because the recent sustained uptick in fatalities has been a deviation from the downward trend of the early 2000s. |

Why are America's roads so bad?

Recent research indicates some key behavioral changes that could explain the rise in accidents in the U.S., beyond what is explained by a rebound in road travel. A key behavioral change is the increase in distracted driving. Most especially, smartphone use has engendered a whole generation of drivers who drive with their eyes off road, and on screen, leading to avoidable accidents. Yet another reason is the chronic driver shortage that besets the trucking industry, which has led to inexperienced and less safe truck drivers on the road. Speeding and inadequate seat belt use are other factors contributing to this trend. |

Behind the numbers

Quantifying the impact of such behavioral changes is a daunting task as it is dependent on reliable and consistent data. Then comes the onerous task of converting these behaviors into insurance pricing levers. While efforts are on to do so, progress is slow, which is evident from the industry's unfavorable loss ratios. Meanwhile, the American consumer has not been spared. Data from the Bureau of Labor Statistics shows that while overall inflation increased by 8.24% from 2007-2017, the price of auto insurance increased by 44.5% in the same time period. The trends discussed above resonate when viewed from a broader, national perspective. In the next article of this series, we will investigate whether additional trends are evident from regional and state analysis for personal and commercial auto. This is the first of a series of three articles aimed at providing an overview of key developments in the U.S. auto insurance industry and U.S. roads in the past decade. Dr. Renu Ann Joseph founded Luminant Analytics, which offers targeted analytics for insurers. An economist from the University of Illinois at Chicago, she has work experience in the financial services industry and in public health. She is passionate about using data insights to unravel the big picture. Connect to her on LinkedIn or reach out to her at [email protected]. See also: 20 car crash tips and things you should know after an accident Can auto technology win the war against distracted driving?