Sport Utility Vehicles And Auto Insurance Costs

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Sport Utility Vehicles And Auto Insurance
Costs
Session PL-30
2001 Lincoln Navigator
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Sport Utility Vehicles

• Chevy Suburban
• Jeep Grand Cherokee
• Ford Explorer
• Lincoln Navigator
• Ford Expedition
• Toyota Land Cruiser
• Mercedes-Benz ML320
• Dodge Durango
• Ford Excursion

1935 Chevy Suburban
2001 Ford Excursion
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Sport Utes Of The Future

• Sport Utility Trucks -Intersection of a Pickup
  Truck and SUV

2002 Lincoln Blackwood SUT
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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

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Whats The ProblemWith SUVs?

• Too big - take too much space
• Hard to see around
• High fuel consumption
• Pollute more

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Whats The ProblemWith SUVs?

• Exempt from gas guzzler tax
• Bumper mismatch with cars
• Pose greater risk of loss to cars
• Higher rollover potential

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NHTSA Rollover Info

• More than 10,000 people die every year in
  rollovers
• Over 60 of SUV occupant deaths in 1999 were
  rollovers, cars only 23
• 80 killed in single-vehicle rollovers were
  unbelted
• Belted occupants have 75 less chance of being
  killed in rollover

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New NHTSA RolloverRisk Ratings

• 5 Stars lt 10
• 4 Stars 10 - 20
• 3 Stars 20 - 30
• 2 Stars 30 - 40
• 1 Stars gt 40

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New NHTSA RolloverRisk Ratings

• Best rating Honda Accord
• Worst rating Chevy Blazer and GMC Jimmy/Envoy
• SUVs had lowest rankings1 - 3 stars
• Most cars had highest rankings4 stars

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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
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Factors Affecting SUV Insurance Costs

• Rising popularity- Changing mix
• Many are 4 wheel drive
• Longer stopping distances
• Stiffer ladder frames vs unibody
• dont collapse, more force
  into vehicle it hits

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This is what happened when Chevy S10 with full
ladder frame hit Pontiac Grand Prix with unibody.
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Factors Affecting SUV Insurance Costs

• More horsepower
• Higher theft potential
• Use of vehicle
• Higher rollover potential
• Driver demographics
• Mix of coverages

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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

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Light Truck Growth Percent Of All New U.S. Auto
Sales
Light trucks include full-size vans, minivans,
pickups and sport utility vehicles
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Change in U.S Auto Sales2000 vs. 1999
Light Trucks
Cars
Total
SUVs
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2000 Light Truck Sales
2000 US New Light Truck Sales - 8.5 Million
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Growth of SUVs
Sport Utility Vehicle Sales U.S. Market
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2000 US New Auto Sales
2000 US New Auto Sales - 17.3 Million
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Top 10 Selling Vehicles

• ? 1 . Ford F-Series PK
• ? 2. Chevrolet C/K PK
• P 3. Ford Explorer
• 4. Toyota Camry
• 5. Honda Accord
• 6. Ford Taurus
• P 7. Dodge Ram PK
• P 8. Ford Ranger PK
• 9. Honda Civic
• 10. Ford Focus

12 Months 2000 US Auto Sales
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Who Needs SUV?

• Three major segments of SUVs

• Heavy-duty
• GMC and Chevy Suburban
• New Ford Excursion
• Compact sport utilities
• Explorer and Jeep Grand Cherokee
• Full size utilities
• Chevy Tahoe, Ford Bronco and Ford Expedition

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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

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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

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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

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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

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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

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Who Buys SUVs?

• Expedition vs Explorer
• Full size vs compact

• 48 of full size for towing, 16 for
  compact
• 33 of full size for off-road, 14 for
  compact

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Who Buys SUVs?
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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

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Whats The Problem With SUVs?

• Safety issues
• Are smaller cars safe enough?
• Does Detroit need to change?

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The Most Capable SUV Ever?
This is what really happened in the Winter of
2000 to one of those go anywhere SUVs.
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Whats The Problem With SUVs?

• 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.
• 20 of new vehicle sales are SUVs.

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Whats The Problem With SUVs?

• Does data support different rating?
• Need to consider factors affecting both frequency
  and severity
• Physical Damage (Comp vs. Coll)
• Expect higher Theft Losses
• Lower Coll Losses

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Whats The Problem With SUVs?

• Does data support different rating?
• 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?

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Whats The Problem With SUVs?

• 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. Suburban vs. Urban
• Youthful vs. Adult vs. Senior Adult
• By Region, By State

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Panelist

• Kim Hazelbaker
• Senior Vice President with Highway Loss Data
  Institute (HLDI)
• HLDI publishes motor vehicle insurance loss data,
  performs crash tests
• Holds a masters degree in economics and
  statistics and a bachelors in business from the
  University of Missouri

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Sport Utility Vehicles And Auto Insurance
Costs
Session PL-30
2002 Chevy Trailblazer