SAN FRANCISCO, CA--(Marketwire - July 15, 2009) - With gas prices on the rise again,
energy-conscious consumers are looking to save on fuel costs, and hybrid
vehicles are a popular choice when gas mileage is a primary concern.
However, an analysis of the driving habits of about 360,000 vehicle owners
by insurance services company Quality Planning has concluded that many
owners of hybrid vehicles drive as much as 25 percent more miles than
owners of non-hybrids, and that hybrid vehicles are often more expensive to
repair.
Numerous studies have compared the cost of ownership of hybrid vehicles
versus conventionally powered vehicles, but driving behaviors of the owners
of hybrids and vehicle repair costs are generally not part of the analyses.
To understand driving behaviors of hybrid vehicle owners, Quality Planning
looked at classes of vehicles for which both hybrid and conventional
engines are available and examined annual mileage for both vehicle types.
Also considered were two common auto insurance rating variables: everyday
driving (normally termed "pleasure use" by auto insurers) and
"high-commute" driving (defined as commuting more than 15 miles per day).
Do hybrid vehicles encourage owners to drive more?
Quality Planning found that while the mileage for high-commute drivers was
roughly the same for both types of vehicles, those drivers who use their
hybrid vehicles for non-commuting purposes drove an average of 10,500 miles
per year -- 2,000 miles (or roughly 25 percent) more than non-commuting
drivers of non-hybrid vehicles.
"The additional miles driven by hybrid vehicle owners would seem to offset
the net ecological benefit of owning a fuel-efficient vehicle. After all, a
gallon of gas is a gallon of gas, no matter which type of engine is burning
it," said Dr. Raj Bhat, president of Quality Planning. "What we don't know
is whether owning a hybrid vehicle encourages people to drive more miles
each day or take more pleasure trips. High-mileage drivers appear to be
attracted to these vehicles, so insurers should take steps to verify the
intended use of hybrids and validate actual miles driven wherever
possible."
To further assess the risk represented by hybrid vehicles, Quality Planning
looked at the demographic profile of their owners and found that they are
frequently women, typically older, more affluent, and often live in cities.
Quality Planning also looked at the number of moving violations issued to
Toyota Prius drivers and found that those drivers tend to get more than
their fair share of traffic tickets (0.38 violations per 100,000 miles
driven, compared with an overall average of 0.23). However, this 65 percent
difference may be because urban drivers generally receive more traffic
citations.
Will a damaged hybrid cost more to repair?
Quality Planning also looked at the loss experience of conventional
vehicles versus hybrids by comparing the collision and comprehensive loss
costs of both kinds of vehicles. Loss costs include impact of both
frequency (the number of claims per 100 insured vehicle years) and severity
(the dollar impact of a claim). For all 2008 model-year hybrids, collision
coverage loss dollars were 13 percent higher, and comprehensive coverage
loss dollars were almost 17 percent higher. The 2006 and 2007 models had
substantially higher comprehensive losses.
When comparing specific 2006-2008 models, the highest collision loss costs
were associated with the Toyota Highlander hybrid (45 percent higher) and
the Ford Escape hybrid (31 percent higher). In general, there were
increases in both frequency of claims and severity of claims for hybrid
vehicles. When compared with a baseline loss cost of $1 for the equivalent
non-hybrid model, the hybrid models had the following loss costs:
Collision Comprehensive
Coverage Coverage
2006 Hybrid Models $1.16 $1.75
2007 Hybrid Models $1.09 $1.35
2008 Hybrid Models $1.13 $1.17
"These findings should be of particular interest to auto insurers. Some
currently offer policy discounts on hybrid vehicles. A 25 percent increase
in miles driven or a 30 percent differential in loss costs is very
significant," added Dr. Bhat.
Study methodology
Quality Planning sampled 359,309 vehicles from multiple carriers across the
country over a two-year period from January 2007 to December 2008. The
vehicles were re-underwritten using Quality Planning's proprietary program
for correcting rating errors, Precision Re-Underwriting™. The vehicles
analyzed were hybrid vehicles that had equivalent non-hybrid counterparts.
The annual mileage estimates were obtained from Quality Planning's
proprietary RISK:check® process, which uses statistical estimates and
odometer readings when available; the estimates were confirmed by
policyholders through mail and phone contact.
About ISO
A leading source of information about risk, ISO provides data, analytics,
and decision-support services to professionals in many fields, including
insurance, finance, real estate, health services, government, human
resources, and risk management. Using advanced technologies to collect,
analyze, develop, and deliver information, ISO helps customers evaluate and
manage risk. The company draws on vast expertise in actuarial science,
insurance coverages, fire protection, fraud prevention, catastrophe and
weather risk, predictive modeling, data management, economic forecasting,
social and technological trends, and many other fields. To meet the needs
of diverse clients, ISO employs an experienced staff of business and
technical specialists, analysts, and certified professionals. In the United
States and around the world, ISO helps customers protect people, property,
and financial assets. For more information, visit
www.iso.com.
About Quality Planning
An ISO business, Quality Planning is focused exclusively on providing
rating integrity solutions to auto insurers. Quality Planning works with
insurance companies to identify areas of significant rating errors using
sophisticated database management, statistical analysis and modeling,
customized survey design, and highly targeted customer interaction. Quality
Planning helps clients work within their existing rating plans and charge
fair prices to policyholders based on a true representation of risk. The
company was founded in 1985 and is headquartered in San Francisco. For more
information, visit
www.qualityplanning.com.
Contact Information: Contact:
Tim Cox
Zing Public Relations
650-369-7784