Berkshire Hathaway CEO Warren Buffett said in a statement today that auto insurance rates are rising this year due an increase in the number and severity of auto accidents in 2015. Berkshire Hathaway Insurance is the second-largest auto insurer in the United States.
Buffett cited statistics for the first six months of 2015, which showed a dramatic increase in the number and cost of traffic accidents from the same period in 2014. According to the National Safety Council, nearly 19,000 people were killed in car crashes between January and June 2015, an increase of 14 percent from the previous year. Serious injuries were up 30 percent to 2.3 million during the same period. In all, the increase cost the American economy an estimated $152 billion in lost wages, lost productivity, property damage and medical expenses during the first half of 2015–an increase of nearly 25 percent over 2014.
The increased number of injuries and deaths runs counter to trends over the past several decades. Cars are much safer today, says Buffett, and the number of traffic fatalities has been declining almost every year.
More Driving Equals More Auto Accidents
Lower gas prices and the improving economy are partly to blame for the increase, said Buffett, a sentiment echoed by National Safety Council president and CEO Deborah A.P. Hersman. “One of the strongest correlations tends to be between the economy and traffic fatalities,” she said in a 2015 interview with Newsweek. “When the economy is doing well and things are growing, we tend to see more fatalities.”
But the fact that more people are on the road doesn’t totally explain the increase, Buffett explained, because the population death rate and the number of deaths per mile driven are also up. According to the NSC, there were 12.5 auto deaths per 100,000 people in January through June 2015, versus 11.1 deaths per 100,000 during the same period in 2014. The estimated number of deaths per 100 million vehicle-miles traveled is also up by 8 percent, from 1.2 to 1.3.
Alcohol, Distracted Driving & Auto Accidents
Mr. Buffett also pointed to the fact that 30 percent of all auto fatalities are still caused by people driving under the influence of alcohol. Further, 50 percent of passengers killed in a car crash were not wearing their seat belts. However, these numbers have been fairly consistent for a number of years. Distracted driving, which includes texting and talking on the phone while driving, is a more recent phenomenon, and it appears to be on the rise.
In 2013, 3,154 people were killed in car accidents in which the drivers were distracted. This was a slight decrease from 2012. However, the number of people seriously injured in distracted-driving crashes rose during that time, from 421,000 to 424,000.
In 27 percent of fatal crashes involving distracted driving, the driver was under 20 years of age.
Although distracted driving is hard to quantify accurately, Buffett estimated that about 10 percent of all fatal car crashes are caused by drivers who are not paying attention to the road.
Obviously, the major focus of decreasing auto accidents is saving lives. However, as the number and severity of auto accidents goes up, auto insurance rates will increase as well. The best way to keep rates down is to be a safe driver and encourage others to do the same.
We at Carmoon offer a wide array of affordable business insurance options for your business, automobile and home. Don’t wait for your rates to go up — give us a call at 516-292-3780 to set up an appointment to discuss your needs. We’re available every weekday from 9 a.m. to 6 p.m. Or, if you prefer, request a free consultation online and we will get back to you within one business day.