When a live-action movie about Mr. Magoo was released with Leslie Nielson of “Naked Gun” fame playing the painfully nearsighted, accident-prone cartoon character in the late 1990s, groups representing the blind protested and secured some disclaimers from the producers at the end of the film. Will auto insurers fare any better if they take steps to respond to the exploding number of elderly drivers hitting the road?
The aging U.S. population will pose stiff challenges for auto insurers from an underwriting, claims-handling and loss control standpoint, as carriers can expect a 500 percent increase in the miles driven by seniors in 2020 compared to 1990, warned Steven Weisbart, vice president and chief economist at the Insurance Information Institute.
By 2025, expect 64 percent of men and 40 percent of women over 85 to be on the road, Mr. Weisbart predicted during a speech this month before the Annual Property-Casualty Executive Conference, sponsored by the National Underwriter Company.
Why is that? With improving health and deteriorating financial security (thanks to the demise of defined benefit pension plans and the rising retirement age for full Social Security and Medicare benefits), like it or not, more elderly might have no choice but to remain at their postsif only to get coverage for expensive prescription drugs. Many of these elderly workers will commute by car.
Indeed, Mr. Wiesbart said one trucking association is actively recruiting mature drivers in their 50s.
With the aging population, also expect more seniors to be driving to help care for elderly parents, spouses and/or siblings.
On the other hand, some elderly might drive less because they cant afford to–given the price of gas, insurance and general maintenance. But expect the additional pressure to drive to overwhelm any factors discouraging seniors from hitting the road.
Mr. Weisbart raised a number of troubling implications in his speech. Will seniors living on fixed incomes be less likely to replace worn tires or breaks? Will they be more likely to hold onto older, broken-down cars rather than get a safer, newer model?
And what about the diminishing vision, hearing and reflexes of elderly drivers? Mr. Weisbart noted, only half-jokingly, that using moving violations as a rating criteria wont cut it, because many older motorists dont move very quickly.
A vision test by itself would not likely be good enough, he noted. Older drivers may see a stop sign, but the question is whether they will they stop for it in time–or at all.
Ive always wondered whether it wouldnt be a good idea for all drivers over 65 to be required to undergo a periodic road test to make sure their skills and reflexes are intact. Mr. Weisbart mentioned that option in his speech, but was very skeptical whether the local Department of Motor Vehicles would ever make such a controversial demand of older licensees.
If you thought New York Gov. Eliot Spitzer took heat for wanting to give drivers licenses to illegal immigrants, just wait until he asks for everyone over 65 to prove themselves behind the wheel all over again to DMV officials!
However, auto insurers faced with a wave of elderly drivers would be well within their rights to demand a driving test of their senior clientele. This could be done the hard way, with a sharp stick (the threat of coverage cancellation for those who refuse to be tested) or with a tasty carrot (the promise of a discount for those who pass).
Either way, the insurer would be assured that their elderly drivers still have their wits about them and are capable of handling themselves on the road.
On the other hand, I can already hear the wails of complaint from AARP and other senior advocacy groupsperhaps even age discrimination suits!
And you thought the use of credit scores was controversial!
Mr. Weisbart raised a number of possibilities. He suggested that new reciprocal or mutual insurers might be created to serve the specific needs of elderly drivers–especially if many mainstream carriers start to reject seniors.
He also suggested that some carriers might have to offer larger-type policies and claim forms, or perhaps even audio policies for those who have a hard time reading all that small type.
Perhaps insurers will staff special senior claims centers will other seniors, who are more likely to be sympathetic and patient with those their own age. (On the flip side, he warned that the elderly might require more “hand holding” from claims reps.)
What do you think insurers should do?
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