Older Drivers: Road Safety and Automobile Insurance
By Anthony Cappelletti
What is meant by the term older driver? Older drivers may be considered as those over 70. But this is not a term with a strict definition. Whatever we consider the term older driver to mean, the percentage of older drivers on the road is growing. The reasons for this are twofold: (1) As the baby boomer generation[i] ages (currently ranging from 59 to 77 years of age), the number of older drivers on the road increases; (2) improved health of the elderly means that the older drivers will keep driving later in life. In this article, I’ll look at what this could mean for road safety and automobile insurance.
Background
Historically, insurance companies writing automobile insurance used age of the driver as a primary rating factor—at least for drivers under 25 and drivers over 50. Drivers under 25 were charged higher rates and drivers over 50 (and under some age limit, such as 70 or 75) were given a “mature drivers” discount. The issue with drivers under 25 having a higher loss cost is due to their lack of driving experience, it is not due to anything physiological. For this reason, many automobile insurers moved away from using “age under 25” as a rating factor and replaced it with years of driving experience. However, after a certain number of years of driving experience (perhaps 10 years), years of driving experience isn’t necessarily a significant indicator for loss cost. Typically, a driving experience rating factor groups those with over a certain number of years of driving experience together. For example, it could be structured with declining rates for each year of driving experience from zero to nine, and the lowest rate for those with 10 or more years of driving experience (before consideration of other rating factors).
Many automobile insurers have a mature drivers discount. This is a target market for many insurers. But insurers know that driving skills tend to decrease with advanced age so they would limit the discount to a range of ages.
There are many reasons why one would expect the claims experience for drivers of advanced age to be worse than experienced drivers that are not of advanced age. The following outlines a few of the reasons, in no particular order, and with no particular age in mind as to when the likelihood of this happening increases significantly:
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Motor function (reflexes and range of motion) |
With advanced age, people tend to start having slower reflexes. This is just a normal part of aging. But slower reflexes can increase the likelihood of being in an accident. Also, as we age, muscles tend to be less flexible, arthritic pains attack joints and disk degeneration in the spinal cord may occur. This results in a decreased range of motion making some driving tasks more difficult (tasks such as checking one’s blind spot and turning around to look behind the vehicle when in reverse). |
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Cognitive function |
Dementia is not a normal part of aging. However, the likelihood of developing some form of dementia increases with age. For those that develop dementia, driving ability is greatly affected by the loss of memory and problem-solving abilities. Some forms of dementia may affect movement and balance. |
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Vision |
Vision tends to degenerate as we get older. Corrective eyewear usually takes care of this. However, night vision also tends to become a problem with advanced age. This increases the likelihood of being involved in an accident at night. |
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Medications |
The older a person is, the more likely they are to be on medications. Some of these medications may impair alertness. |
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Recovery from injury |
As we age, recovery from injury can take longer and be more expensive. This likely increases the severity of claims. However, those that reach a certain age tend to be retired, so there would be a reduced number of claims for loss of earnings from employment. |
I must admit that looking at the list I created is a little depressing. But on a positive note, a lot of it is because we are living longer than before and advances in medical science keep happening. And, my favorite, perhaps in 20 years, the technology for self-driving cars will be at a stage where it will be an option for those of an advanced age to maintain their mobility independence but not be at risk of causing accidents.
I digress. We all know what could cause drivers of an advanced age to have an increased frequency and severity of claims, but does this show up in accident statistics?
What Do the Statistics Say?
Keep in mind that there is no set definition of older driver. Each set of statistics is based on how they define it. So, there will be some differences based what cutoff age is used.
The Insurance Information Institute (III) summarized data from the U.S. National Highway Traffic Safety Administration (NHTSA) that looked at results from 2009 and from 2018.[ii] The cutoff age for this comparison was 65 (which is, in my opinion, not that old). This comparison shows that the 65+ age group went from 12.9% to 16.0% of the total population, an increase of 24.1%. Over the same time frame, drivers 65+ involved in fatal crashes went from 12.0% of drivers in fatal crashes to 14.2%, an increase of 19%. Also, over the same time frame, drivers 65+ that died in an accident went from 15.1% of total driver fatalities to 18.7%, an increase of 23.8%. What can be inferred from this is that the growth in the frequency of fatal accidents for those aged 65+ is not out of line with the growth in the percent of the total population of those aged 65+. However, these statistics do not tell the whole story. Exposure to loss is not just about the population of drivers, it is also directly related to distance driven. It is recognized that the average annual distance driven for those aged 65+ is significantly less than for adults under age 65.
The June 2021 volume of the Journal of Safety Research included the article “Continued Trends in Older Driver Crash Involvement Rates in the United States: Data Through 2017–2018.”[iii] This study used data from 1997 to 2018 and compared the 70+ age group to the middle-aged (35–54) group. This study showed that fatal crash rates per 100,000 of licensed drivers for drivers ages 70–79 trended downward to the point they are now less than the rate for middle-aged drivers. However, these statistics did show that the fatality rate per mile driven is higher for those in the 70+ age group because of the difference in average annual distance driven.
The NHTSA published “Older Driver Performance Across Six Naturalistic Studies”[iv] in 2021. This article mentions the fact that statistics by population can be misleading as older drivers drive significantly less. The study attempted to measure age-related functional status by road test scores. However, the data was limited, and correlations were weak. No definitive conclusions were made from this study.
There could be an argument made that those with diminished abilities due to age self-regulate by driving less. They may also choose to drive vehicles with more safety features to reduce risk. Whatever the reason or reasons, the increased frequency per distance unit driven is offset by a decrease in annual distance driven.
Usage-Based Insurance
Usage-based insurance (UBI) is now commonly used in automobile insurance rating. Under UBI, many traditional rating factors are replaced by information developed from telematics that can measure risky driving behavior. This may capture some of the risk of older drivers with diminished abilities, but probably not all. The risk captured by telematics would be things like hard-braking, high g-force turns, speeding, and quick acceleration. These are typically not the risks from older drivers with diminished capabilities. The accidents they cause would be from unsafe lane changes, unsafe merge onto highways, unsafe left turns and stepping on the wrong pedal. Telematics would only capture these events if an accident occurred.
Also, while telematics and UBI captures driving habits that are highly correlated to an increased frequency of accidents, they do not reflect any difference in the average cost of accident injuries due to age. For this to be considered, there must be some form of an adjustment to the rate based on age.
“Driving helps older adults stay mobile and independent. But the risk of being injured or killed in a traffic crash increases as people age.” - Centers for Disease Control and Prevention[v]
Advanced Vehicle Safety Features
Earlier I noted how older drivers may be more likely to select vehicles with advanced safety features. This may be from self-regulation to reduce risk (in addition to reduced distance driven). Or they have more disposable income to spend on vehicles with all the latest safety features. Perhaps it’s some combination of both.
All drivers can benefit from advanced vehicle safety features. But the benefits to older drivers are likely greater. Older drivers with diminished driving capabilities are often involved in collisions such as changing lanes improperly or simply drifting from their lane or stepping on the accelerator instead of the brake pedal or poor night vision. Advanced vehicle safety features reduce the likelihood or severity of collisions from these situations. Advanced vehicle safety features include active driving assistance, adaptive cruise control, advanced forward lighting systems, automatic emergency braking, automatic emergency steering, blind-spot warning, forward collision warning, lane-departure warning, lane-keeping assistance, pedestrian detection, rear cross traffic warning, and reverse automatic braking. Some vehicles on the market have autonomous vehicle control in limited situations.
And while not an advanced vehicle safety feature, GPS systems, which are included with many new vehicles,[vi] assist drivers so they do not get lost on their way to a destination. This can be very helpful to older drivers that have minor difficulties remembering routes.
Driver Licensing
Many jurisdictions have additional requirements for older drivers when renewing their driver’s license. There is no standard for this. Some jurisdictions impose additional requirements at age 70, while some impose them at age 80. Some jurisdictions require a vision test, some a written test and some a road test. While these requirements, especially a road test, would seem to remove drivers from the road if their driving skills are “too” diminished, what they achieve in actual practice may be minimal. Sometimes the road test is on a closed course. A road test on a closed course is not full of the distractions and hazards of driving on open roads with traffic. Even if a road test is done on open roads with traffic, assessments would err on the side of allowing the older driver to keep their license unless the driver is very clearly unable to operate the vehicle safely. This is because those making the assessment understand how disruptive it can be to an older person’s independence to lose their driver’s license. Most times, it is the individual that decides on their own to stop driving—sometimes with family members providing advice.
Final Thoughts
As the baby boomer generation gets older, the increased percentage of older drivers on the road needs to be recognized by all. Insurers need to make sure that their rates are reflective of an insured’s potential for claims. Governments need to make sure license renewal requirements are fair and reasonable—balancing road safety while understanding that not renewing an older driver’s license will affect their independence. Vehicle manufacturers are increasingly including advanced safety features on their vehicles as standard features and not options. They are also being included on lower priced vehicles in addition to high-end vehicles. Governments can (and have) made many of these features required for all new vehicles.
Sooner or later, there will be a time when I am an older driver and must make a difficult choice of whether or not to keep driving. I hope that autonomous vehicles are available and affordable so, that I can maintain my independence.
Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries, the editors, or the respective authors’ employers.
Anthony Cappelletti, FSA, FCIA, FCAS, is a staff fellow for the SOA. He can be contacted at acappelletti@soa.org.