It’s not hard to see how drivers with histories of driving violations pose a higher risk to insurers. However, there may be another side to the story that isn’t immediately captured: A considerable portion of major driving offenses are dismissed or downgraded in the U.S. court system.
Today, 80% of drivers have access to programs that dismiss or downgrade their violations, which can obscure their driving history and mask dangerous behaviors. This means it’s important for insurers to stay abreast of new ways to help mitigate this risk and ensure they are providing customers with accurate quotes that capture the full risk profile.
Downgraded or dismissed? What does it mean?
Downgrades and dismissals can happen when courts make certain programs available. These programs are intended to ease the burden of costly tickets and ultimately help drivers stay licensed, insured and on the road. They can also take pressure off courtrooms and judges that are often backed up with cases. Unfortunately, as a result, people’s real driving violation histories may be disguised. In fact, according to TransUnion’s DriverRisk analysis, 57% of original major offenses, such as DUIs, are actually unobservable by insurers due to dismissals or downgrades. In the states evaluated, 27% of traffic tickets are outright dismissed.
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For example, in New Jersey, drivers can pay $250 to $350 to downgrade certain types of moving violations. A few states have programs for drivers facing a first-time DUI charge to have their case dismissed. For the cases not dismissed, these programs may add delays to the charge appearing on a state-issued driving record. Additionally, there are driving school programs available to drivers to dismiss or downgrade traffic tickets, or to remove points. There are also deferral or probation programs that can eliminate a violation from the state driving record.
So, while drivers benefit from fewer points on their license, insurers are potentially mispricing the policies for drivers whose original violations may have been obscured.
When insurers aren’t presented with the full picture, this can compromise how well premiums align with actual risks. To make things even worse, the DriverRisk study found that the more serious the violation is, the more likely it is to be dismissed or downgraded. The findings show that 41% of DUIs are likely to be dismissed, and distracted driving violations are dismissed 10% of the time. Without visibility into each driver’s actual behavior, insurers tend to spread the premium needed to pay losses associated with these risks across all policies.
This means the base rate for the average driver typically ends up being higher, effectively subsidizing the premium for the drivers with downgraded and dismissed violations. Drivers with dismissed or downgraded violations are more likely to have a loss and a higher loss cost than drivers found guilty of the violation they were ticketed for.
Details of Driving Violations
It is possible and very important for insurers to gain deeper insight into original violation information for prospective and current customers, in addition to the final disposition decisions. Insurers should seek information that includes court record data so they can provide more accurate quotes and improve adhering to their underwriting guidelines. Implementing court record violation data solutions can enable insurers to capture valuable insight into: convictions from a prior state (which may be associated with a previous driver’s license number), regardless of a change in name or address; convictions while driving outside of the resident state; tickets with dispositions other than guilty; and tickets and violations that are still active (not yet adjudicated).
See also: 5 Steps to Understand Distracted Driving
Court record violation data is an essential tool for insurers to develop accurate pricing and underwriting strategies. By understanding a fuller picture of violation history, insurers will be able to more effectively assess the risk of each driver and implement programs to capture the appropriate amount of premium dollars for riskier drivers while providing more affordable premiums to cleaner drivers.
For additional information about TransUnion’s study findings and DriverRisk, please click here.
Details of Driving Violations
It is possible and very important for insurers to gain deeper insight into original violation information for prospective and current customers, in addition to the final disposition decisions. Insurers should seek information that includes court record data so they can provide more accurate quotes and improve adhering to their underwriting guidelines. Implementing court record violation data solutions can enable insurers to capture valuable insight into: convictions from a prior state (which may be associated with a previous driver’s license number), regardless of a change in name or address; convictions while driving outside of the resident state; tickets with dispositions other than guilty; and tickets and violations that are still active (not yet adjudicated).
See also: 5 Steps to Understand Distracted Driving
Court record violation data is an essential tool for insurers to develop accurate pricing and underwriting strategies. By understanding a fuller picture of violation history, insurers will be able to more effectively assess the risk of each driver and implement programs to capture the appropriate amount of premium dollars for riskier drivers while providing more affordable premiums to cleaner drivers.
For additional information about TransUnion’s study findings and DriverRisk, please click here.
