Sport Utility Vehicles And Auto Insurance Costs - PowerPoint PPT Presentation

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Sport Utility Vehicles And Auto Insurance Costs

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This is what happened when Chevy S10 with full ladder frame hit Pontiac Grand Prix with unibody. ... GMC and Chevy Suburban. New 2000 Ford Excursion. Compact ... – PowerPoint PPT presentation

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Title: Sport Utility Vehicles And Auto Insurance Costs


1
Sport Utility Vehicles And Auto Insurance
Costs
Session MIS-33
1998 Ford Expedition
2
Sport Utility Vehicles
  • Jeep Grand Cherokee
  • Ford Explorer
  • Lincoln Navigator
  • Ford Expedition
  • Toyota Land Cruiser
  • Mercedes-Benz ML320
  • Dodge Durango
  • New 2000 Ford Excursion

2000 Ford Excursion
3
Whats The ProblemWith SUVs?
  • Some groups critical of SUVs
  • SUV Anti-Fan Club
  • Sierra Club
  • Friends of the Earth
  • Road Hog Info Trough
  • Consumers Union
  • Concerns with rollovers

4
Whats The ProblemWith SUVs?
  • Too big - take too much space
  • Hard to see around
  • High fuel consumption
  • Pollute more
  • Exempt from gas guzzler tax
  • Bumper mismatch with cars
  • Pose greater risk of loss to cars
  • Higher rollover potential

5
Factors Affecting Auto Insurance Costs
  • Size, weight, and bumper mismatch
    with cars

Height 73 Weight 5,293 Pounds
Height 54.7 Weight 2,676 Pounds
Chevy Suburban
Chevy Cavalier
6
Factors Affecting SUV Insurance Costs
  • Rising popularity- Changing mix
  • Many are 4 wheel drive
  • Longer stopping distances
  • Stiffer frames
  • dont collapse, more force
    into vehicle it hits

7
This is what happened when Chevy S10 with full
ladder frame hit Pontiac Grand Prix with unibody.
8
Factors Affecting SUV Insurance Costs
  • More horsepower
  • Higher theft potential
  • Use of vehicle
  • Higher rollover potential
  • Driver demographics
  • Mix of coverages

9
Current SUV Rating Practices
  • Insurers commonly vary physical damage rates for
    repairability and damageability, theft potential
  • Most do not vary liability rates
  • Some have started to vary liability
  • Others say data does not support

10
Growth of SUVs
Sport Utility Vehicle Sales U.S. Market
11
Growth of Light Trucks
Light Trucks Percent Of All New U.S. Car Sales
50
36
1992
1998
Light trucks include full-size vans, minivans,
pickups and sport utility vehicles
12
Factors Affecting Auto Insurance Costs
  • Three major segments of SUVs
  • Heavy-duty
  • GMC and Chevy Suburban
  • New 2000 Ford Excursion
  • Compact sport utilities
  • Explorer and Jeep Grand Cherokee
  • Full size utilities
  • Chevy Tahoe, Ford Bronco and Ford Expedition

13
Who Needs SUV?
  • Those requiring
  • Heavy-duty wagons for
  • 9 passenger seating
  • Larger cargo capacity
  • Towing
  • Compact sport utilities for
  • More room, greater towing and cargo space due to
    larger family

14
Who Needs SUV?
  • Those who currently are
  • Minivan owners who need nine-passenger seating
    and who find the styling and image of SUV
    appealing
  • Crossovers from luxury cars, station wagons and
    even pickups

15
Who Buys SUVs?
  • For Ford Expedition
  • (Considered Full Size)
  • Median age is 40 to 50 years
  • Median annual income is 85,000
  • 60 are college graduates
  • 40 are women
  • 85 are married

16
Who Buys SUVs?
  • Three major groups of buyers
  • Suburban families with teenage children who
    reject minivans and shun station wagons
  • Rural families who need vehicle to go to town as
    well as travel off-road
  • Empty-Nesters who lead active lives and need
    towing or just to visit grandchildren

17
Who Buys SUVs?
  • Expedition vs Explorer
  • Full size vs compact
  • Families with 5 members twice as likely to buy
    full size
  • 53 of full size buyers use vehicle frequently
    for hunting, fishing or camping, 24 for compact
  • 48 of full size for towing, 16 for
    compact
  • 33 of full size for off-road, 14 for
    compact

18
Whats The Problem With SUVs?
  • Safety issues
  • Large vehicle striking small vehicles
  • Greater risk to occupants of smaller vehicles
  • Risk of death in car vs. pickup/SUV crash is 4
    times greater for those in car
  • Are smaller cars safe enough?
  • Does Detroit need to change?

19
The Most Capable SUV Ever?
Was this SUV on the way to the North Pole or to
the top of a mountain? This is what really
happened in the Blizzard of 1999 to one of those
go anywhere SUVs.
20
Whats The Problem With SUVs?
  • Rating issues
  • Does data support different rating?
  • Changing mix of cars vs. light trucks
  • Of vehicles on the road, 65 are cars, 35 are
    pickups, SUVs, and vans.
  • New vehicle sales split about 50/50.
  • 8 of vehicles on the road are SUVs.
  • 18 of new vehicle sales are SUVs.

21
Whats The Problem With SUVs?
  • Rating issues
  • Does data support different rating?
  • Physical Damage (Comp vs. Coll)
  • Expect higher Theft, lower Coll losses
  • Liability (BI/PD vs. Med Pay, PIP)
  • Expect higher BI/PD losses
  • Expect lower Med Pay/PIP losses
  • What is the net result?
  • How does it vary by SUV model?
  • By 2wd vs. 4wd?
  • What about cars, pickups and vans?

22
Whats The Problem With SUVs?
  • Rating issues
  • Does data support different rating?
  • Mix of coverages, limits, deductibles affects
    overall rate adjustments.
  • These can vary depending upon the type of
    business written.
  • Preferred, Standard, Non-Standard
  • Rural vs. Urban
  • Youthful vs. Adult vs. Senior Adult
  • By Region, By State

23
Panelists
  • Kim Hazelbaker
  • Senior Vice President with Highway Loss Data
    Institute (HLDI)
  • HLDI publishes insurance data concerned with the
    human and economic losses associated with owning
    and operating motor vehicles
  • Holds a masters degree in economics and
    statistics and a bachelors in business from the
    University of Missouri

24
Panelists
  • Michael Dubin
  • Consulting Actuary in Casualty Practice of the
    Atlanta office of Milliman Robertson
  • FCAS, MAAA, Associate of the Conference of
    Consulting Actuaries, and member of the
    International Actuarial Association
  • Holds B.S. in mathematics from Carnegie Mellon

25
Sport Utility Vehicles And Auto Insurance
Costs
1998 Ford Expedition
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