Abstract by Elijah Harmon
Auto Loss Costs
Our goal is to provide an analytical basis for discussing and understanding auto insurance loss cost drivers that ultimately affect premiums. To analyze collision frequencies, states were divided into quintiles each year based on their average collision frequency. Quintile averages were then plotted against a set of automotive and financial variables. Drivers per lane mile has a strong positive relationship with collision frequency, and the relationship is very consistent across years. The same is true about many of the other congestion variables (rural/urban vehicle miles traveled (VMT) per lane, rural/urban commute time, number of licensed drivers, etc.). We found evidence that collision frequency in the United States is strongly and positively related to various measures of congestion.