Share on Facebook Share on Twitter Share on Google+ Share on Linkedin In part one of a special AAIS Advisory Report on automobile insurance, Robert Gordon, SVP of PCI Policy Development and Research, speaks about economic and behavioral changes affecting the auto insurance market, including increased losses, distracted driving, “drug driving”, the “sharing economy” and autonomous vehicles. Mr. Gordon says 70 percent of consumers believe safer cars will mean fewer accidents and lower insurance costs. Instead, what PCI is reporting is the biggest increase in traffic deaths in 50 years. While an improving economy and more drivers on the road are part of the reason for increased accidents, there are several other factors. Some States are affected by changing demographics and older drivers, and unusual weather events. Congestion also plays a role in increased traffic accidents, related somewhat to distracted driving. Together with TrueMotion, an insure tech company, PCI have identified the iPhone applications most likely to be used by drivers. While Google Maps is the most common app used while driving, PokemonGo, YouTube and Netflix are among the top ten. States that have decriminalized marijuana have also experienced increases in driving accidents. Mr. Gordon points out that years of public education about the dangers of drinking and driving have had a positive impact on accidents from drunk driving. He believes States that have liberalized their marijuana laws need to implement standards and measures to help police deal with drivers under the influence. According to Mr. Gordon, sees a “messy transition” in the auto industry due to autonomous vehicles. He quotes KPMG, which said that 60 percent of the auto insurance industry might disappear as a result of driverless cars. Currently, loss costs in personal auto are increasing dramatically. The Government is considering an increase in the minimum insurance coverage required by drivers, which would increase premium, even if there were a decrease in accidents. Speaking about developments in the “sharing economy”, Mr. Gordon recalls fights that PCI had with Uber, Lyft and other transportation network companies, who wanted personal auto insurance policies to cover their drivers while conducting commercial activities. PCI fought those battles state by state, and won. More recently, however, Uber was expanding into commercial delivery services and suggesting personal auto should pay for the coverage. PCI prevailed again and Uber drivers are now buying commercial auto policies. In part two of this 2-part AAIS Advisory Report, John Kadous, VP of Personal Lines at AAIS, discusses how about how emerging risks, telematics and Big Data are affecting auto insurance policies.