Study: Older drivers good, but not good enough for 25% discount

New Massachusetts insurance data indicate that drivers over 65 are relatively low risks behind the wheel but probably not deserving of the full 25 percent auto insurance discount they receive under state law.

The data, compiled by the Automobile Insurers Bureau of Massachusetts, indicate that, as a group, drivers over 65 are lower insurance risks than all other drivers. But a subset of the over-65 group — drivers over 75 — get involved in more accidents and file significantly more property damage claims than all other drivers except inexperienced, youthful ones. Yet the accidents caused by the over-75 group resulted in relatively few injuries.

Overall, the data suggest that the state’s oldest drivers are not killing machines on the road, despite a recent spate of deadly accidents involving older drivers. But the data also raises questions for the first time about a state law giving drivers over 65 an automatic 25 percent discount on their auto insurance premiums whether they’re good drivers or not. The discount was initially approved in the wake of a failed 1977 experiment with auto insurance competition, and officials involved in crafting the legislation say it was provided as a benefit to seniors and not based on any accident data.

The Automobile Insurers Bureau said in its report that it produced the four-page document (Download SeniorDrivers.pdf) in response to inquiries from the news media and state regulators about the rash of serious accidents involving senior citizens. Sen. Brian Joyce of Milton and others on Beacon Hill have called for more frequent licensing of older drivers.

“It is hoped that this information will shed some light on the degree to which this is a problem,” the bureau’s report said.

The bureau distributed its report to its member companies and the state Division of Insurance. CWunbound obtained a copy from one official who received it. Officials at the bureau, member companies, and the Division of Insurance declined comment.

CommonWealth shared a copy of the report with Beth Duggan, associate professor of gerontology at the McCormack Graduate School of Policy Studies at UMass-Boston and a spokesperson for Safe Roads Now, a coalition of elder groups focused on road safety issues involving elder drivers. Duggan said that, without learning more about the methodology used in the report, she couldn’t comment on its accuracy. She did note that “data that provides a rationale to remove that discount will net insurers significant new revenue.”

The insurance industry report did not address the automatic 25 percent auto insurance discount given to seniors.

Beacon Hill lawmakers have been reluctant in the past to tangle with seniors, who are a politically powerful group. “Many seniors expect a discount. They go into Dunkin’ Donuts and get a discount. They go into McDonald’s and get a discount,” said Frank Mancini, president of the Massachusetts Association of Insurance Agents. “But if competition is going to work and it’s going to be fair, then subsidies have to come out.”

The insurance industry report breaks out accident data for the years 2005 through 2008 for two groups — inexperienced drivers (those on the road for less than six years) and experienced drivers (more than six years). The experienced drivers are broken down into three subgroups — those 65-74, those 75 and above, and all others.

The data seem to confirm the assumption that drivers over 65 tend to be safer drivers than the rest of the population, primarily because they self-regulate themselves. If they have any concern about their driving, older drivers tend to drive slowly and travel during daylight hours and when the weather is good.

According to the report, the four-year average accident rate for property damage for drivers over 75 was 6.6 percent, meaning that 6.6 claims were filed for every 100 cars insured. That was well above the rates for drivers age 65-74 (5.3 percent) and all other experienced drivers (5.5 percent), and far below the rates for inexperienced, principally youthful, drivers (11.4 percent).

The over-75 drivers fared slightly better on collision claims. The four-year average accident rate for collision claims was 6.7 percent for drivers over 75, 6.3 percent for drivers 65-74, 7.1 percent for all other experienced drivers, and 13.1 percent for inexperienced drivers.

When it comes to the rate of injuries per accident, the oldest drivers were the best. The over-75 group filed 19.7 bodily injury claims per 100 accidents, below the 21.2 claims filed by the 65-74 group, the 25.2 claims filed by all other experienced drivers, and the 29.3 claims filed by inexperienced drivers.
Overall, the data suggests that older drivers are relatively safe insurance risks, but probably not safe enough to warrant an automatic 25 percent discount. The data also show that the drivers age 65-74 are better risks than the over-75 drivers.

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Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

Bob Passmore, senior director, personal lines policy at the Property Casualty Insurers Association of America, said the Massachusetts senior discount is the largest in the nation and one of only a handful that are based solely on age. In most other states, the discount is contingent on the driver taking a defensive driving course and passing.

Passmore said any discount that is not warranted by accident data means companies have to charge other customers more to pay for it. “Whoever is getting the discount is going to be subsidized by others,” he said.