Welcome to the seventh edition of our Underwriting Expert Series. Missed the previous articles in the series? View them here! This week, we are excited to share Senior Underwriting Specialist and Claims Manager, Mervyn Gillson’s, perspective on the driving risk of the millennial generation.
Why is the millennial generation’s driving risk an important topic for life underwriters?
When it comes to evaluating the driving risk of applicants that come across your desk – there are two key components to be aware of; what is the risk and who is at risk. While the millennial generation may be known for more reckless and distracted driving– is their risk actually higher or do other age groups pose the same risk? Find out below.
Defining the millennial generation
Consensus suggests a millennial is anyone born between the early 1980’s and the early 2000’s; more specifically, 1982 and 2004. So, as of 2018, that covers ages 14 to 36. Millennials are the first truly digital generation and are known for constantly being plugged in and on their phones presenting more opportunities for distracted driving.
A generation with high accident rates
Last year, USA Today published an article titled “Millennial Drivers are Highway Hazards, Survey Shows”. The article quotes the American Automobile Association (AAA) Foundation for Traffic Safety survey which found drivers aged 19 to 24, to be engaged in the riskiest behaviours behind the wheel.
- There are other statistics that support this notion as well.
- Transport Canada 2014 statistics showed that the age group 20 – 34 had 28.9% of the driver fatalities of that year.
- MADD Canada found that young people have the highest rates of traffic death and injury per capita among all age groups and the highest death rate per kilometer driven among all drivers under 75 years of age.
- Motor vehicle crashes are the leading cause of death among 16 – 25 year olds, and alcohol and/or drugs are a factor in 55% of those crashes.
While these stats demonstrate a high driving risk for the millennial generation, is this age bracket truly most at risk?
Since the late 1990’s and early 2000’s, all US states and all Canadian provinces have implemented some form of graduated licensing systems. Studies on these systems have shown that abiding by these laws were associated with substantially lower fatal crashes and substantially lower insurance claim rates among young teen drivers covered by the laws.
Strong restrictions on nighttime driving and teen passengers, as well as raising the licensing age, reduced rates of fatal crashes and insurance collision claims.
In 2016, journalist Denver Nicks, shared that “over the last three decades a smaller proportion of young Americans has been getting drivers’ licenses” for various reasons including:
- 37% due to being too busy
- 32% due to the cost of owning and maintaining a vehicle
- 31% due to the ease of getting a ride from someone else
Other reasons included a preference for biking or walking, public transportation, concern for the environment, ability to do business on line, and disability.
Decrease in young drivers with license, no decrease in driving fatalities
Yet with a decrease in young drivers getting their licenses, driving fatalities have not declined. According to the Fatality Analysis Reporting System (FARS), a census provided to the National Highway Traffic Safety Administration (NHTSA), after years of a steadily declining fatality rate in vehicular accidents, it has actually increased in three out of five years from 2012 to 2016.
FARS also shared that despite improved vehicle safety over the years, improved seatbelt effectiveness and decreased number of drunk driving-related fatalities since 1982, the overall vehicle fatality rate is still going up.
What age brackets are contributing to these increasing numbers?
The 2017 AAA Foundation for Traffic Safety study revealed that the following age groups reported engaging in speeding, red light running or texting behind the wheel in the past thirty days:
- Drivers ages 19-24: 88.4%
- Drivers ages 25-39: 79.2%
- Drivers ages 40-59: 75.2%
- Drivers ages 16-18: 69.3%
- Drivers ages 75+: 69.1%
- Drivers ages 60-74: 67.3%
While the millennial age group has the highest percentage of dangerous road behaviors, the study demonstrates that they are not the only culprits. Especially when it comes to texting and driving, which has been deemed to be as impairing as drinking and driving.
Millennials aren’t the only generation distracted on the road
The millennial generation may be known for always being on their phones, but they certainly are not the only ones. The Deloitte “2016 Global Mobile Consumer Survey: US Edition” showed that collectively US smartphone users check their phones more than 9 billion times per day. From this, what do you think the chances are that a lot of this occurs while driving?
When underwriting driving risk, remember the bigger picture
The question remains, are millennials the real menace on the roads? Is it fair to slap on an extra premium for life insurance when underwriting millennial drivers just because we assume they engage in dangerous behaviors?
While we see lots of statistics that would certainly lead us in that direction, there are offenders in any age category. When underwriting a case, it is important to consider the big picture. Not just the age, generational behavior or driving history. Take each applicant case by case and underwrite the individual based on their overall profile, not the stories you hear in the media. Then you can decide if the risk is standard, needs an extra rating or is a risk you don’t want to touch.
Thanks for tuning in to this week’s expert series. Make sure to subscribe to receive the next one in your inbox!
Industry Designations: FLMI, FALU, and ALHC.
Merv's responsibilities stretch from risk selection, quality assurance, training, mentoring for life... as well as overseeing Claims. Previously he was AVP of Wholesale Underwriting. and started his insurance career at Norwich Union in England. After moving to Canada (30 years ago), he took a job with Norwich Union, later moving on to Unity Life as Chief Underwriter in 1991 and then to Sun Life on May, 2010. He has been President of UAT (Underwriters Association of Toronto) for two years and more recently he was named Chair of the Canadian Institute of Underwriters.