Adding electronic stability control (ESC) to cars and SUVs significantly lowers insurance losses for crash damage to insured people's own vehicles. But ESC has a negligible effect on insurance losses for damage to other people's vehicles in multiple-vehicle collisions and on claim frequencies under personal injury protection coverage.
These are the main findings of a special study by the Highway Loss Data Institute (HLDI), which is closely affiliated with the Insurance Institute for Highway Safety. An Institute study previously revealed that ESC substantially reduces fatal single-vehicle crashes (see "ESC reduces deaths, especially in single-vehicle crashes," Jan. 3, 2005). The HLDI study as well as the Institute's earlier report, are based on essentially the same set of passenger vehicles before and after the addition of ESC, which is designed to help drivers maintain control during high-speed maneuvers or on slippery roads.
Collision losses go down
HLDI researchers compared insurance losses under several coverages before and after ESC. The biggest effect was on collision coverage losses, which reflect both the frequency of claims and the costs. Collision coverage losses were 30 percent lower for SUV models with ESC than for previous models of the same SUVs before the technology was added. Losses went down 16 percent for luxury cars and 13 percent for sports cars (most cars with ESC are in these two groups).
The main benefit was to lower the average amount of insurance payments per claim by substantially reducing the most expensive claims. For example, 4.9 percent of claims for damage to the SUVs in the study were for $20,000 or more before ESC was added. After ESC the proportion of big claims went down to 3.4 percent. Similar reductions in collision claims exceeding $20,000 occurred for luxury and sports cars.
Relative collision coverage losses before and after standard ESC (100 = average all vehicles)
Percentage of collision claims that were $20,000 or more before and after standard ESC, overall losses (100 = average all vehicles)
Other kinds of losses weren't lowered
Property damage liability insurance covers damage to other people's vehicles (not the insured party's vehicle). Losses under this coverage decreased slightly for luxury cars and SUVs after ESC was added but not for sports cars. Losses under personal injury protection coverage followed a similar pattern, going down for SUVs and luxury cars but not for sports cars.
Relative property damage and personal injury protection losses before and after standard ESC (100 = average all vehicles)
Overall losses, property damage liability
Claim frequency, personal injury protection
Insurance losses versus fatality reductions
The Institute study that was published last January found that adding ESC reduces single-vehicle fatal crashes by about 56 percent The fatality risk in collisions involving two or more vehicles is a much lesser 17 percent.
"If ESC is so effective in reducing fatal crashes, why isn't there a greater effect on insurance losses? The answer involves the kinds of crashes in which ESC is designed to work," says Institute chief operating officer Adrian Lund.
Collision insurance reimburses policyholders for damage to the insured person's own vehicle in any kind of crash, single- or multiple-vehicle, while property damage liability covers damage to other people's vehicles in crashes involving more than one vehicle. The biggest effect of ESC is on single-vehicle crashes at higher speeds, "so we would expect to find some reduction in collision but not in property damage liability losses, and this is exactly what the HLDI researchers found," Lund says.
The absence of an effect of ESC on injury claims "is more surprising," Lund adds. "We might expect that the reduction in collision claims for the most severe crashes, those involving more than $20,000 in vehicle damage, might be accompanied by a commensurate reduction in injury claims. But these claims aren't being reduced. We don't know exactly why this is the case, but we do know that claims under personal injury protection coverage are dominated by relatively minor injuries such as whiplash that occur in two-vehicle crashes, not by the kinds of serious injuries that ESC can affect by reducing high-speed single-vehicle crashes."
The circumstances of such crashes are relatively rare. A driver has to be losing control at fairly high speed for ESC to activate. It wouldn't activate in anticipation of a fender-bender or other less serious crash, in which sprains and other frequent but comparatively minor injuries occur. So ESC shouldn't have a big influence on injury losses.
"While avoiding loss-of-control crashes apparently won't affect insurance costs across the board, the safety benefits of ESC are obvious," Lund points out. "There's a potential for this technology on all vehicles to save more than 7,000 lives each year by avoiding more than half of all fatal single-vehicle crashes."