Fewer Teen DriversFewer Customers, Reduced Premium Revenue
Parents are paying attention to the high costs associated with getting their teens behind the wheel. On average, parents of teens pay or will pay nearly two-thirds or more of all costs associated with their child driving, ranging from their teen’s car insurance to gasoline, according to results of a recent Nationwide Mutual Insurance Co. survey.
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And of all the parental concerns associated with the costs of teen driving, auto insurance tops the list with 66% of parents noting this as a top concern. This is contributing to parents delaying their teen’s obtaining a driver’s license, the insurer says.
This delay in teens getting licenses could affect premium revenue, according to Bloomberg. In the report, Larry Thursby, VP of auto product & pricing at Nationwide says, “Assuming that customers do delay, there would be fewer accidents. Revenues would be down and profitability would be up.”
According to Nationwide’s poll—conducted online by Harris Interactive—half of the parents of driving-age teens say they have made financial cutbacks to allow a child to drive, including cutting back on entertainment expenses (40%), eating out (38%) or vacation expenses (35%).
“Our survey found that households with teen drivers shell out an average of nearly $3,100 each year to allow their teens to drive,” Thursby says “After analyzing Nationwide’s four million auto policies, we found nearly a half percentage decrease in policies with teen drivers, from 5.8 in 2008 to 5.4 in 2011. While other factors are involved, the cost of having a teen driver is a major one.”
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