The Company You Keep ® 1 THE MVR RISK Greg Ferrara CVP Underwriting QA, Research & Training April 4, 2011 Greg Ferrara CVP Underwriting QA, Research & Training April 4, 2011

Antitrust New York Life adheres to the letter and spirit of the antitrust laws. The information in this lecture is intended to advance the knowledge and improve the risk assessment skills of the participants. Under no circumstances shall this lecture be used as a forum for the pricing of specific products, determining how they are marketed, or for any other anticompetitive purpose. Copyright 2010 New York Life Insurance Company. All rights reserved. New York Life adheres to the letter and spirit of the antitrust laws. The information in this lecture is intended to advance the knowledge and improve the risk assessment skills of the participants. Under no circumstances shall this lecture be used as a forum for the pricing of specific products, determining how they are marketed, or for any other anticompetitive purpose. Copyright 2010 New York Life Insurance Company. All rights reserved. 2

3 OVERVIEW MVRs- The Good, The Bad, The Ugly Motor Vehicle Accidents Speeding DUI / DWI Driving While Suspended / Revoked Careless vs Reckless Minor Violations Multiple Violations Red Flags Questions MVRs- The Good, The Bad, The Ugly Motor Vehicle Accidents Speeding DUI / DWI Driving While Suspended / Revoked Careless vs Reckless Minor Violations Multiple Violations Red Flags Questions

MVRs- The Good, The Bad, The Ugly Integral component of evaluating risk Cost-effective Each state has a different format Nomenclature varies from state to state Subtle factors are easy to miss Integral component of evaluating risk Cost-effective Each state has a different format Nomenclature varies from state to state Subtle factors are easy to miss 4

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Motor Vehicle Accidents ,059 2,491, (24 hrs) 1 (13 minutes) 41,059 2,491, (24 hrs) 1 (13 minutes) 6

Motor Vehicle Accidents 2007 #1 cause of death for ages 4 – 34 –#3 for ages 1-3 –#5 for ages Minor Accident –Non-injury –No fault –Cited accident with no details Major Accident –Injury –Major property damage #1 cause of death for ages 4 – 34 –#3 for ages 1-3 –#5 for ages Minor Accident –Non-injury –No fault –Cited accident with no details Major Accident –Injury –Major property damage 7

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Motor Vehicle Accidents Factors –Age  16 – 24: 24% of all traffic fatalities  25 – 54: 46% of all traffic fatalities –Gender  Males: 71% of all traffic fatalities Red Flags –Vehicular Homicide –Vehicular Manslaughter –Vehicular Assault –Hit and Run Factors –Age  16 – 24: 24% of all traffic fatalities  25 – 54: 46% of all traffic fatalities –Gender  Males: 71% of all traffic fatalities Red Flags –Vehicular Homicide –Vehicular Manslaughter –Vehicular Assault –Hit and Run 9

Speeding 2007 Contributing factor in 31% of all fatal accidents 13,040 lives lost 88% of fatalities due to speeding were on roads that were not an Interstate Highway Contributing factor in 31% of all fatal accidents 13,040 lives lost 88% of fatalities due to speeding were on roads that were not an Interstate Highway 10

Speeding Speeding impacts –the driver’s ability to steer safely around curves or objects in the road –extends the distance needed to stop –increases the distance a vehicle travels while the driver reacts to danger For drivers involved in fatal accidents, young males most likely to be speeding As driver’s age increases, numbers of speeding related accident fatalities decrease Speeding impacts –the driver’s ability to steer safely around curves or objects in the road –extends the distance needed to stop –increases the distance a vehicle travels while the driver reacts to danger For drivers involved in fatal accidents, young males most likely to be speeding As driver’s age increases, numbers of speeding related accident fatalities decrease 11

Speeding 2007 Speeding + Alcohol = DEATH –40% of drivers w/BAC.08 and up were speeding when a fatal accident occurred Speeding + No Seatbelt = DEATH –Under age 21 in fatality – 51% speeding & no seatbelt –21 and older – 55% speeding & no seatbelt Speeding + Alcohol = DEATH –40% of drivers w/BAC.08 and up were speeding when a fatal accident occurred Speeding + No Seatbelt = DEATH –Under age 21 in fatality – 51% speeding & no seatbelt –21 and older – 55% speeding & no seatbelt 12

DUI / DWI Decreasing numbers of ETOH related fatalities –1982: 26,000 –1994: 17,300 –2007: 12,998 Cause –New state and national laws –Media attention –More law enforcement –Improved vehicle and highway design –Increase in public awareness of the seriousness of impaired driving Decreasing numbers of ETOH related fatalities –1982: 26,000 –1994: 17,300 –2007: 12,998 Cause –New state and national laws –Media attention –More law enforcement –Improved vehicle and highway design –Increase in public awareness of the seriousness of impaired driving 13

DUI / DWI Bad news –55% of drinking drivers had BAC at or above.15 –The12,998 deaths accounted for 32% of MV fatalities  Age is a factor  21 to 24: 35% of deaths  25 to 34: 29% of deaths –Drivers with BAC of.08 and higher, that were involved in fatal accidents, were 8 TIMES more likely to have a PRIOR conviction for DUI / DWI Bad news –55% of drinking drivers had BAC at or above.15 –The12,998 deaths accounted for 32% of MV fatalities  Age is a factor  21 to 24: 35% of deaths  25 to 34: 29% of deaths –Drivers with BAC of.08 and higher, that were involved in fatal accidents, were 8 TIMES more likely to have a PRIOR conviction for DUI / DWI 14

DUI / DWI AKA –Administrative Per Se –Conditional Privilege –Implied Consent –Interlock Device –Wet Reckless –Zero Tolerance Possible AKA –Open Container AKA –Administrative Per Se –Conditional Privilege –Implied Consent –Interlock Device –Wet Reckless –Zero Tolerance Possible AKA –Open Container 15

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Driving While Suspended / Revoked Suspended –Takes away the privilege to drive for a short period of time –To reinstate, the driver must pay a fee to restore the license Revoked –Cancels the license –To reinstate, the driver must apply near the end of the revocation period –State motor vehicle administration will conduct a review of the driver’s history and decide if the license can be reinstated Suspended –Takes away the privilege to drive for a short period of time –To reinstate, the driver must pay a fee to restore the license Revoked –Cancels the license –To reinstate, the driver must apply near the end of the revocation period –State motor vehicle administration will conduct a review of the driver’s history and decide if the license can be reinstated 17

Driving While Suspended / Revoked Nearly 18% of all fatal accidents involved at least one improperly licensed driver Compliance with suspension or revocation orders is almost totally disregarded –As many as 80% of those with suspended or revoked licenses continue to operate motor vehicles California impounds the vehicles owned by DWS/R offenders resulting in an accident reduction rate –For 1 st time offenders: 25% –For repeat offenders: 38% Nearly 18% of all fatal accidents involved at least one improperly licensed driver Compliance with suspension or revocation orders is almost totally disregarded –As many as 80% of those with suspended or revoked licenses continue to operate motor vehicles California impounds the vehicles owned by DWS/R offenders resulting in an accident reduction rate –For 1 st time offenders: 25% –For repeat offenders: 38% 18

Status Suspended or Revoked Current license status reads Suspended or Revoked –Many driving records do not clearly list the reason for a suspension or revocation –May require eliciting details from the proposed insured Current license status reads Suspended or Revoked –Many driving records do not clearly list the reason for a suspension or revocation –May require eliciting details from the proposed insured 19

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Careless Driving vs Reckless Driving Careless –When a driver does not operate a vehicle in a careful and prudent manner –Conviction usually results in a fine Reckless –More serious than careless  A willful or wanton disregard for the safety of persons or property  Misjudgment of common driving procedures, often causing accidents –Punishable by fines, imprisonment and license suspension or revocation Careless –When a driver does not operate a vehicle in a careful and prudent manner –Conviction usually results in a fine Reckless –More serious than careless  A willful or wanton disregard for the safety of persons or property  Misjudgment of common driving procedures, often causing accidents –Punishable by fines, imprisonment and license suspension or revocation 21

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Minor Violations Some examples –Disobeying a traffic signal or stop sign –Improper passing, turning, backing –Following too closely –Driving the wrong way, on a shoulder, uninsured –Failure to signal, yield to pedestrian –Operating out of class, overloaded vehicle –Cell Phone (some states) –Seatbelt Conviction usually means paying a fine Some examples –Disobeying a traffic signal or stop sign –Improper passing, turning, backing –Following too closely –Driving the wrong way, on a shoulder, uninsured –Failure to signal, yield to pedestrian –Operating out of class, overloaded vehicle –Cell Phone (some states) –Seatbelt Conviction usually means paying a fine 23

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Minor Violations – Cell Phones Driver Distraction Risk –NEJM study (1997)  4 times more likely to have an accident  Equal to driving with BAC of.10  Hands-free device provided no safety advantage –2010 data suggests that 28% of accidents (fatal and non-fatal) are caused by a driver on a cell phone Driver Distraction Risk –NEJM study (1997)  4 times more likely to have an accident  Equal to driving with BAC of.10  Hands-free device provided no safety advantage –2010 data suggests that 28% of accidents (fatal and non-fatal) are caused by a driver on a cell phone 25

Minor Violations - Seatbelts National Highway Traffic Safety Administration estimates that in 2007, seatbelts saved 15,147 lives 33% of passenger car and 37% of light truck occupants in fatal accidents were unrestrained 31% of unrestrained occupants were totally ejected –76% of those ejected died National Highway Traffic Safety Administration estimates that in 2007, seatbelts saved 15,147 lives 33% of passenger car and 37% of light truck occupants in fatal accidents were unrestrained 31% of unrestrained occupants were totally ejected –76% of those ejected died 26

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Multiple Violations AKA: –MVR may state frequent, habitual or chronic offender Note carefully the number of violations, type of violations and dates of occurrence May indicate a tendency toward risky behavior in general –The entire case may warrant a closer look AKA: –MVR may state frequent, habitual or chronic offender Note carefully the number of violations, type of violations and dates of occurrence May indicate a tendency toward risky behavior in general –The entire case may warrant a closer look 28

Red Flags Multiple DUI / DWI convictions DUI / DWI in a young person Major Accidents Multiple recent speeding violations Speeding + ETOH Speeding + no seatbelt Reckless driving Multiple occurrences of suspended/revoked license Current suspended or revoked license Scofflaw Multiple DUI / DWI convictions DUI / DWI in a young person Major Accidents Multiple recent speeding violations Speeding + ETOH Speeding + no seatbelt Reckless driving Multiple occurrences of suspended/revoked license Current suspended or revoked license Scofflaw 29

Credits The statistics quoted in this presentation were provided by: –The National Highway Traffic Safety Administration –The Insurance Information Institute –The New England Journal of Medicine –U.S. Department of Transportation The statistics quoted in this presentation were provided by: –The National Highway Traffic Safety Administration –The Insurance Information Institute –The New England Journal of Medicine –U.S. Department of Transportation 30

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