DRIVEN TO DISTRACTION

Here’s how driving factors into insurance underwriting.

Cassie Schneider

Thanks to a clampdown on drunk driving, more use of seatbelts, and cars equipped with airbags and the technology to help avoid accidents, the number of deaths due to motor vehicle accidents has decreased over the past few decades. However, the risks of mortality and morbidity related to drunk driving are still essential risk factors to assess when underwriting insurance applicants.

Transport Canada reported more than 160,000 car
accidents each year on average over the last decade
in Canada (2008–2018), with 108,000 resulting in
personal injury in 2018. Although the fatality rate (per
10,000 registered motor vehicles) dropped from 1.62
to 0.77 in 2018, that’s still an average of eight fatalities
per day. Victims in the 65 and up age group are most
likely to die, followed by those aged 25 through 34,
who are also more likely to be injured.1

According to 2017 data out of the United States
from Centers for Disease Control and Prevention,
45% of U.S. deaths in the 20 to 24 age group were
attributable to accidents, and primarily motor vehicle
accidents.2 Inexperience, combined with a youthful
sense of being invincible, are two contributing factors
behind these statistics.

Young males tend to drive faster and typically have less
experience in avoiding accidents. Alcohol is often a factor,
as is distracted driving. According to Statistics Canada, in
2015, 27% of deaths on Canadian roads resulted from
speeding, and distracted driving increased the risk of an
accident by 500%. Even with efforts to reduce impaired
driving, 40% of drivers killed in a car crash in 2008
consumed alcohol before getting behind the wheel.3

The other age group of concern is those 65 and older.
Here, driving too slowly is the problem. They may have
slower reflexes and decreased confidence. Poor eyesight,
particularly with night driving, may contribute, and
they may also be on prescription medications that can
impede their ability to react quickly.

For this reason, when underwriting for motor vehicle
accident risk, the underwriter will look at several risk
factors and pay particular attention to those under 30
and those 65 and older.

For the younger applicant under age 30, underwriters
will note the applicant’s occupation and consider
whether it involves a significant amount of driving.
Experience has shown that a poor driving history is a
good indicator of an individual’s future driving skills,
so an applicant with a history of traffic violations will
be more likely to have accidents in the future. Other
behaviour patterns that suggest the applicant may have
poor judgment include driving without a seatbelt, while
using a cell phone, or without automobile insurance.

Underwriters will also consider the applicant’s
participation in hazardous sports or aviation, which
may show a tendency for thrill-seeking and speeding.
They’ll also check whether there is past criminal history
that would highlight a risk taker.

Since alcohol and drugs are involved in approximately
half of all fatal auto accidents involving young adults
under age 30, any concern about alcohol overuse or
drug use, including cannabis, would be a significant
red flag. An applicant with a charge of driving under
the influence (DUI) with abnormal laboratory findings
of alcohol overuse could be declined, as would a fairly
recent history of more than one DUI.

The underwriter will be wary of habitual offenders, as
frequency and severity of the offence are known risk
indicators. For example, a repeat offender who drives
50 km per hour over the speed limit will be assessed as
carrying more risk than someone who speeds 30 km per
hour above.

For seniors over age 65, driving history remains a
consideration, but the underwriter will focus more
attention on how the applicant manages daily living
activities, along with any medical impairments they
might have, and any prescription medications being
taken. Identifying those seniors who should not be on
the road any longer may be a challenge for families and
physicians, but this is extremely important as they pose
the greatest risk for motor vehicle accidents.

At all ages, underwriters will require motor vehicle
reports whenever there is significant driving history,
as it is the best tool available to assess driving risk. If
there are concerns about alcohol or the applicant’s
ability to continue to drive, a blood profile and
potentially a doctor’s report may also be needed. A
habitual offender may be declined coverage or offered
a substandard policy, depending on the severity of
the past infractions, recency, frequency, and any other
contributing risk factors that may be present. ©

Written by Carol Neuss, assistant vice-president and chief
underwriter, insurance new business, individual customer for
The Canada Life Assurance Company.

1
Source: Statistics Canada, CANSIM, Table 405-0004. From
1999 the licensed driver data were provided by each jurisdiction:

https://tc.canada.ca/en/canadian-motor-vehicle-traffic-collision-statistics-2018

2

Source: Verywell Health https://www.verywellhealth.com/top-
causes-of-death-for-ages-15-24-2223960

3
Source: Canadian Association of Chiefs of Police quoting
Statistics Canada and Transport Canada data: https://www.cacp.
ca/index.html?asst_id=1626