Nationwide Mutual Insurance Co., the fourth-biggest U.S. auto insurer owned by policyholders, said more parents delaying when teenagers can start driving may reduce premium revenue.
A survey conducted for Nationwide found that almost one in three parents cited costs associated with teen driving, including insurance, as a top concern, and one in seven said they will delay allowing their child to drive, the Columbus, Ohio-based firm said in a statement set for release today.
U.S. households with teen drivers pay an average of $3,100 a year for expenses including insurance and gas, and parents have pared entertainment spending or required children to find jobs to help with the bills, Nationwide said. Adding a teenager to an insurance policy can increase premiums by 50 percent to 100 percent, according to a report last month by the Insurance Information Institute, an industry trade group.
“Assuming that customers do delay, there would be fewer accidents,” Larry Thursby, vice president of auto product and pricing at Nationwide, said in an interview yesterday. “Revenues would be down and profitability would be up.”
The percentage of Nationwide policies with teenage drivers has declined 6.9 percent since 2008, the company said. Today, about 5.4 percent of the insurer’s 4 million auto policies cover teenage motorists, it said.
“With high unemployment, concerns over rising gas prices and inflation, plus the cost of auto insurance for young drivers, the expense of getting a teen behind the wheel is greater than ever,” Nationwide said in the statement.
About 31 percent of 16-year-olds were licensed to drive in 2009, compared with 37 percent in 1999, according to the Federal Highway Administration. Drivers as a percentage of the U.S. population, excluding children under age 14, increased from 72 percent to 86 percent.
The percentage of revenue from personal auto premiums has decreased from 2006 to 2010 for insurers including Geico Corp., a unit of Omaha, Nebraska-based Berkshire Hathaway Inc., and Chubb Corp., based in Warren, New Jersey, according to data compiled by Bloomberg.
(Source: Bloomberg)
Join the official YWN WhatsApp status
5 Responses
Somehow I think they will get by. Wondering why this is on YWN.
I thought that parents of licensed drivers under age 25 who live in the same household are obligated – at least in New York – to have insurance that covers the young drivers, whether or not the young drivers have permission to drive family-owned vehicles. I would be curious to know what is happening to the losses paid out by the insurance pools that cover victims of accidents caused by uninsured and unlicensed drivers.
#2, you missed the point. They are NOT underaged drivers licensed or otherwise. Parents are getting smarter and delaying their kids from driving. That means they are waiting till the kids are older and more mature so they save money and there will be less teen drivers on the road causing accidents.
And that is also why it is on YWN for EVERYONE to learn.
#3 I have read the post and will analyze, assess and decide if it jives with mine and my teenagers needs.
It is not necessary to accept all facts as written. What will save more lives on the road, is WEARING SEAT BELTS and putting CELL PHONES in the TRUNK before driving.
abstinence, surest way to eliminate teen pregnancies, now the surest way to eliminate teen driving accidents.