Rousmaniere: The Smart Phone as Curse — and Savior?

Peter Rousmaniere

Distracted driving — driving while distracted by a smart phone or other infotainment gadget — has been a curse on drivers, their passengers, pedestrians, auto insurers, and — count us in — workers’ comp claims payers.

NCCI released a report in which it estimates that, between 2011 and 2016, the frequency of motor vehicle accident (MVA)-related workers’ comp lost time compensable claims rose by 5% when they would plausibly have declined by 17% along with total claims. (That’s before taking into account the rise in driven miles due to an improving economy.)

What happened? The penetration of mobile phones among Americans rose from 27% in 2010 to 81% in 2016. They are used for lot more than phone calls — texting, for instance. The Bureau of Labor Statistics reported, for 2016: 2,083 transportation work deaths, including 1,252 roadway deaths, 342 pedestrian deaths; the rest are mostly using off road vehicles.

NCCI shared with me the number of MVA claims and their claims costs in 2016 for most of the states it covered. I extrapolated its estimates to account for all states and for self-insurers. The results of my calculations are sobering to the least. I’ve taken some liberties with the NCCI’s typically careful fact presentation to paint a more inclusive picture.

I estimate that on a fully developed (“ultimate”) valuation of MVA-related claims incurred in 2016, total MVA-related lost time claims costs were about $6.5 billion. That’s more than one tenth of all claims costs in that year, as estimated by the National Academy of Social Insurance. Had MVA-related claims matched the trend in all lost time compensable claims, total claims costs would have been about $1.5 billion less. That’s just for one year — 2016.

NCCI knows the kind of drivers who are sustaining the highest percentage increase in the number of MVA-related injuries. Most prominent are taxi drivers, no surprise to me based on my customer experience.

There’s more. MVA-related claims cost about double of the average of all lost time claims. When fully developed, the average MVA-related lost time claims costs around $100,000.

These claims are responsible for a huge number of very high cost claims. Using NCCI data, I estimate that at least one third of workers’ comp claims that have a total cost of at least one million dollars that are MVA-related. (The next greatest cause is falls.)

Workers’ comp loss figures leave out any other damaged parties, such as pedestrians struck by the worker’s vehicles, or occupants in a collided car. Workers’ comp, auto damage, and liability losses are recorded on completely different, unreconciled ledgers.

Auto insurers have been concerned about the impact of distracted driving for some time. They estimate that about 3,500 auto fatalities can be attributed to distracted driving. That’s about 10% of all auto fatalities.

Behavioral changes on the part of drivers may, I expect, reduce this toll, both work and non-work related. Almost every state bans texting while driving, and most ban phone use to some degree.

Insurers began some years ago to slap premium penalties on policy holders for traffic violations involving phone use. According to an online Zebra report, these penalties started in 2010 at a measly 0.2 % penalty on premium. By 2017 they had grown to an average 15.9% penalty. That’s still low compared to the average 77% increase from a DUI violation.

And there are technology fixes. My iPhone detects when my car is moving and disables itself until I stop or unless I tell it that I am not driving.

This recent addition to the iPhone is a clue to how smart phones, while being a potential hazard in driving, may also usher in a new era of safer driving. Smart phones can reliably measure a vehicle’s speed, acceleration, breaking and swerving.

Actuarial Firm Milliman has analyzed the advances of Zendrive, a company formed in 2013 by Google and Facebook alumni. Milliman writes that the firm captures driving behavior from 30 billion miles of smart phone analysis of drivers. The Zendrive app on a smart phone, Milliman says, detects vehicle trips and safety related driving events using smart phone sensors like GPS, gyroscope and accelerometers.

Zendrive appears to have found systematic bias in auto insurer underwriting that can lead to under-pricing auto policies for bad drivers. The highest decile of drivers in the Zendrive universe has a collision frequency per million miles that is 13.8 times more than the lowest decile. The app is said to have up to six times more predictive power of some insurance industry models using telematics data or auto loss history.

Usage based auto insurance is winning more customers. Auto insurers market this deal: Install and use our app, and we will cut premium at first by a bit, then adjust it further based on driving experience. I’m told that some state funds are planning to pilot smart phones as safety aids in driving.

Thus, the safety gains may before long exceed the safety compromises from smart phones.


Peter Rousmaniere is widely known throughout the workers’ compensation industry, both for his writing and consulting experience. Based in the picture perfect New England town of Woodstock, VT, he is a regular on the conference circuit, and is deeply in tune with trends and developments within the industry. His passion is writing and presenting on issues largely related to immigration, and he maintains a blog on the subject at

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