3





To be able to calculate an X year old driver’s fatal crash probability, we attempted to fit a
fourth degree polynomial to the fatal crash rate curve and this is how it fits:.

Figure 3: Graph of age VS average fatal crash rate from 1994-2011
Following are some test values to the formula we generated:
Age (X value)





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Fatal Crash Probability (Y value) Actual Values Relative Error 22 0.021% 0.021% 0% 35 0.011% 0.011% 0% 60 0.009% 0.009% 1% 75 0.013% 0.020% 35% 85 0.026% 0.020% 30% Table 1: Comparison of actual values with fourth degree polynomial values
Age is not the only factor insurance companies consider but it is quite evident that it is
one of the important one. In many states teenage drivers under the age of 16 are required to have
someone with a driver’s license, age 21 years old and above, with them while driving. Young
males are known for being more aggressive drivers. Texting and driving has been an issue
among young drivers. Despite statistics confirming that distracted driving due to texting is
y = 1.541900549E-10×4 -3.154233220E-8×3 + 2.400882689E-6×2 -8.102586684E-5x + 1.127367336E-3
0.000%
0.005%
0.010%
0.015%
0.020%
0.025%
0.030%
0 10 20 30 40 50 60 70 80 90
Graph of Age Vs. Average Fatal Crash Rate 1994 -2011
10

dangerous, 9 states still have no law putting a ban on this practice. While 41 states have outlawed
the practice around year 2007, the evidence of the results is demonstrated on the next graph:

Figure 4: Young drivers fatal crash rate trend from 2000 – 2011 A ban on texting and driving may have resulted in the decrease in crash rates from
0.036% to 0.023% but there is not enough evidence to conclude. Safety features introduced in
the technology of modern car building and comprehensive laws about young drivers may have
also contributed to better driving.
Credit Score:
Studies have shown that drivers with good credit tend to be more responsible while
driving and hence less likely to file a claim. Because of this correlation over 95% of auto
insurance companies take into account the credit score of the driver during the process of
underwriting. In fact, insurance companies examine high school grades of teenage drivers in
order to provide lower rates to responsible teenagers. Because of the rise in competitiveness,
0.000% 0.005% 0.010% 0.015% 0.020% 0.025% 0.030% 0.035% 0.040% 0.045% 1998 2000 2002 2004 2006 2008 2010 2012 Percentage Years 24 & Under Age Driver Fatal Car Crash Trend
Males Females
11

companies take into consideration as many factors as possible so they can provide the most
precise premium rates for its drivers.
From year 2000-2011, on average about 13% of drivers involved in fatal crash carried an
invalid license. This is quite significant. Among drivers carrying invalid licenses who got into an
accident, over 50% had been previously convicted with either one or more than one of: speeding,
DWI, crashes, license suspension or revocations. Driving history, credit score, school grades, etc.
are some of the characteristics that can help insurance companies in assigning a driving to a
particular risk set.
Driving experience plays an important role while pricing auto insurance, regardless of
age. Older drivers tend to be more responsible drivers but without the experience they are all
exposed to same risk. The rates used to compare the premiums were produced assuming the
driver got his/her license at the age of 18. The insurance limits and types of coverage were kept
constant while producing these rates.
The rates for male drivers are the same as the rates for female drivers in the state of
Massachusetts as it is a law in MA that insurance quotes cannot be based upon sex (the same is
true in four other states: Michigan, Montana, North Carolina and Pennsylvania). However, the
statistics shows that male drivers are more likely to get into an accident than female drivers. In
the next section we will look into how gender affects the auto insurance quotes.

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