This year Americans are getting in 14 percent more fatal traffic accidents than last year, the National Safety Council says. And turns out there could be an economic reason.
Darren Grant, who focuses on the economic indicators of traffic fatalities at Sam Houston State University, says this new data makes sense. People don’t drive to work when they’re unemployed.
“During 2007 to 2010, if you look over that window, the reduction in fatalities was so great that it was really important,” he says. “It actually amounted to 1 percent of GDP.”
Grant says there’s enough evidence to tie traffic fatalities to two factors: declining unemployment and lower gas prices. And both are happening right now.
The Department of Transportation won’t attribute a cause to the surge in traffic fatalities, like more people on the road or texting while driving. But Ken Kolosh, manager of statistics with the National Safety Council, says he can see an economic connection.
“Once the economy starts improving, we start seeing the miles start to increase, and then we see fatalities start to increase,” Kolosh says.
So what does that mean for car insurance? James Lynch is chief actuary with the Insurance Information Institute. He says there are essentially three things that make up that rate: the number of cars, the number of accidents and how bad those accidents are.
“The amount of premium that a company collects in the course of a year is a function of those three things,” he says. “But the way your individual rate is calculated is very complicated.”
Allstate already has approval to raise rates by almost 4 percent in many states. Geico says it’ll likely to raise rates as well.
Marketplace is on a mission.
We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.
Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?