Americans just love driving. They clocked 35,795,000,000,000 miles in 2014 and have far outstripped every other nation in driving mileage.

Executive Summary

Opinion: American driving behavior has altered over the last decade, with per capita miles driven trending downward since 2007. Kishore Bharatula of Fractal Analytics notes that the change has resulted in a reduction in accidents and associated claim expenses, but wonders why it has not impacted insurer premiums.

Insurance companies historically have placed a great weight on mileage driven along with other rating factors based on driver and vehicle characteristics to decide on premiums. But the behavior of American drivers has been changing over the last decade, which will likely have an impact on insurance accidents, claims and premiums.

The price of gas is the single largest variable expense in driving. Crude oil prices have been trending negatively over the last few months and thus should encourage Americans to drive even more. More miles driven would mean higher risk of an accident and therefore a claim. However, from the graph below, we can clearly see that crude oil prices didn’t have a significant impact on miles driven by Americans.

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