Session PL-30
Sport Utility Vehicles And
Auto Insurance Costs
2001 Lincoln Navigator
Sport Utility Vehicles
•
•
•
•
•
•
•
•
•
Chevy Suburban
Jeep Grand Cherokee
Ford Explorer
Lincoln Navigator
Ford Expedition
Toyota Land Cruiser
Mercedes-Benz ML320
Dodge Durango
Ford Excursion
1935 Chevy Suburban
2001 Ford
Excursion
Sport Utes Of The Future
• Sport Utility Trucks -Intersection
of a Pickup Truck and SUV
2002 Lincoln Blackwood SUT
What’s The Problem
With SUVs?
• Some groups critical of SUVs
– SUV Anti-Fan Club
– Sierra Club
– Friends of the Earth
• Road Hog Info Trough
– Consumers Union
• Concerns with rollovers
What’s The Problem
With SUVs?
• Too big - take too much space
• Hard to see around
• High fuel consumption
• Pollute more
What’s The Problem
With SUVs?
• Exempt from gas guzzler tax
• Bumper mismatch with cars
• Pose greater risk of loss to cars
• Higher rollover potential
NHTSA Rollover Info
• More than 10,000 people die every
year in rollovers
• Over 60% of SUV occupant deaths in
1999 were rollovers, cars only 23%
• 80% killed in single-vehicle rollovers
were unbelted
• Belted occupants have 75% less
chance of being killed in rollover
New NHTSA Rollover
Risk Ratings
5 Stars
< 10%
4 Stars
10% - 20%
3 Stars
20% - 30%
2 Stars
30% - 40%
1 Stars
> 40%
New NHTSA Rollover
Risk Ratings
• Best rating: Honda Accord
• Worst rating: Chevy Blazer and
GMC Jimmy/Envoy
• SUVs had lowest rankings
1 - 3 stars
• Most cars had highest rankings
4 stars
Factors Affecting Auto
Insurance Costs
Size, weight, and bumper
mismatch with cars
Height: 73”
Height: 54.7”
Weight: 5,293 Pounds Weight: 2,676 Pounds
Chevy Suburban
Chevy Cavalier
Factors Affecting SUV
Insurance Costs
• Rising popularity- Changing mix
• Many are 4 wheel drive
• Longer stopping distances
• Stiffer ladder frames vs unibody
– don’t collapse, more force
into vehicle it hits
This is what happened when
Chevy S10 with full ladder
frame hit Pontiac Grand Prix
with unibody.
Factors Affecting SUV
Insurance Costs
• More horsepower
• Higher theft potential
• Use of vehicle
• Higher rollover potential
• Driver demographics
• Mix of coverages
Current SUV Rating
Practices
• Insurers commonly vary physical
damage rates for repairability and
damageability, theft potential
• Most do not vary liability rates
• Some have started to vary liability
• Others say data does not support
Light Truck Growth
Percent Of All New U.S. Auto Sales
49%
33%
20%
15%
1970
1980
1990
2000
Light trucks include full-size vans, minivans,
pickups and sport utility vehicles
Change in U.S Auto Sales
2000 vs. 1999
9.4%
3.8%
2.7%
1.7%
Cars
Light
Trucks
SUVs
Total
2000 Light Truck Sales
SUVs
41%
Pickups
38%
Vans
21%
2000 US New Light Truck Sales - 8.5 Million
Growth of SUVs
Sport Utility Vehicle Sales
U.S. Market
3,500,000
1,750,000
929,000
1990
1995
2000
2000 US New Auto Sales
Cars
51%
SUVs
20%
Pickups
Vans
29%
2000 US New Auto Sales - 17.3 Million
Top 10 Selling Vehicles
 1.
 2.
P 3.
4.
5.
6.
P 7.
P 8.
9.
10.
Ford F-Series PK
Chevrolet C/K PK
Ford Explorer
Toyota Camry
Honda Accord
Ford Taurus
Dodge Ram PK
Ford Ranger PK
Honda Civic
Ford Focus
12 Months 2000 US Auto Sales
Who Needs SUV?
• Three major segments of SUVs
– Heavy-duty
• GMC and Chevy Suburban
• New Ford Excursion
– Compact sport utilities
• Explorer and Jeep Grand Cherokee
– Full size utilities
• Chevy Tahoe, Ford Bronco and Ford
Expedition
Who Needs SUV?
•Those requiring
– Heavy-duty wagons for
• 9 passenger seating
• Larger cargo capacity
• Towing
– Compact sport utilities for
• More room, greater towing and
cargo space due to larger family
Who Needs SUV?
•Those who currently are
– Minivan owners who need ninepassenger seating and who find the
styling and image of SUV appealing
– Crossovers from luxury cars, station
wagons and even pickups
Who Buys SUVs?
• For Ford Expedition
(Considered Full Size)
– Median age is 40 to 50 years
– Median annual income is $85,000+
– 60% are college graduates
– 40% are women
– 85% are married
Who Buys SUVs?
• Three major groups of buyers
– Suburban families with teenage
children who reject minivans and
shun station wagons
– Rural families who need vehicle to go
to town as well as travel off-road
– Empty-Nesters who lead active lives
and need towing or just to visit
grandchildren
Who Buys SUVs?
• Expedition vs Explorer
Full size vs compact
– Families with 5+ members twice as
likely to buy full size
– 53% of full size buyers use vehicle
frequently for hunting, fishing or
camping, 24% for compact
Who Buys SUVs?
• Expedition vs Explorer
Full size vs compact
– 48% of full size for towing,
16% for compact
– 33% of full size for off-road,
14% for compact
Who Buys SUVs?
Baby
Boomers
60%
GenXers
22%
Mature
18%
What’s The Problem
With SUVs?
• Safety issues
– Large vehicle striking small vehicles
– Greater risk to occupants of smaller
vehicles
– Risk of death in car vs. pickup/SUV
crash is 4 times greater for those
in car
What’s The Problem
With SUVs?
• Safety issues
– Are smaller cars safe enough?
– Does Detroit need to change?
The Most Capable
SUV Ever?
This is what really happened in
the Winter of 2000 to one of
those go anywhere SUVs.
What’s The Problem
With SUVs?
• Does data support different rating?
– Changing mix of cars vs. light trucks
• Of vehicles on the road, 65% are cars,
35% are pickups, SUVs, and vans.
• New vehicle sales split about 50/50.
• 8% of vehicles on the road are SUVs.
• 20% of new vehicle sales are SUVs.
What’s The Problem
With SUVs?
• Does data support different rating?
– Need to consider factors affecting
both frequency and severity
– Physical Damage (Comp vs. Coll)
• Expect higher Theft Losses
• Lower Coll Losses
What’s The Problem
With SUVs?
• Does data support different rating?
– Liability (BI/PD vs. Med Pay, PIP)
• Expect higher BI/PD losses
• Expect lower Med Pay/PIP losses
• What is the net result?
• How does it vary by SUV model?
• By 2wd vs. 4wd?
• What about cars, pickups and vans?
What’s The Problem
With SUVs?
• Does data support different rating?
– Mix of coverages, limits, deductibles
affects overall rate adjustments.
– These can vary depending upon the
type of business written.
• Preferred, Standard, Non-Standard
• Rural vs. Suburban vs. Urban
• Youthful vs. Adult vs. Senior Adult
• By Region, By State
Panelist:
• Kim Hazelbaker
– Senior Vice President with Highway
Loss Data Institute (HLDI)
– HLDI publishes motor vehicle
insurance loss data, performs crash
tests
– Holds a masters degree in economics
and statistics and a bachelors in
business from the University of
Missouri
Session PL-30
Sport Utility Vehicles And
Auto Insurance Costs
2002 Chevy Trailblazer