You know that your auto insurance company has been using your driving record to help determine what auto insurance policies you qualify for and how much you’ll pay.
Now DMV records could start playing a bigger role in life insurance rates, too.
A new study from LexisNexis and RGA Reinsurance Co. found that people who have more driving violations and who are involved in more car crashes have shorter lifespans — and not due to car accidents.
The researchers matched more than 7.4 million motor vehicle records across all age groups with the Social Security Death Master File and identified 73,000 deaths.
Their analysis of the records showed that the more violations and accidents a driver had, the higher his or her mortality rate. Those with between two and five violations experienced a 24 per cent higher death rate while those with six or more major violations experienced an 80 per cent higher mortality rate.
“The trends we saw were consistent across all ages, demonstrating that the number of violations is an important predictor of increased mortality,” says Elliott Wallace, vice president of life insurance for LexisNexis.
The study correlates accidents and violations to riskier lifestyles that lead to earlier death. But the study doesn’t identify what those lifestyle risks are, Wallace says.
Life insurance company intentions
The results of the study aren’t news to life insurance companies, says Kevin Pledge, CEO and co-founder of Insight Decision Solutions in Toronto and a member of the Society of Actuaries. “When I saw the study, my first thought was, ‘Yeah, we know this,'” he says.
But now there’s evidence to back the practice of using motor vehicle records for qualifying applicants for life insurance. “It’s a good step forward that the study is available,” Pledge says.
Wallace notes that now life insurers have the evidence they need to support the practice.
Pledge expects the study to spur even more life insurers to use DMV records to underwrite applicants.
Some companies collect motor vehicle records to compare against traditional sources and may use them more in the future, Pledge says.
Driving records help provide instant answers
In today’s 24/7 world, Pledge says, life insurance companies need ways to qualify applicants quickly and be able to give them life insurance quotes instantly. By using motor vehicle records to judge an applicant, “you don’t have to wait for data to come back. You’re talking about two seconds.”
Life insurers also can obtain prescription drug histories on applicants instantly from databases kept by companies such as IntelliScript and MedPoint.
With the technology available today, Pledge says, “you have instant access to motor vehicle records and the applicants’ prescription drug history, and so you can underwrite quickly and effectively by looking at those two things.”
Pledge says the study will make life insurance companies feel more comfortable using driving records to help underwrite applicants looking for life insurance policies of up to half a million dollars.
At the same time, he says, life insurance companies aren’t as likely to use driving records to help them determine the eligibility and cost of policies for people looking for life insurance policies of more than $500,000. People applying for higher amounts may still need to undergo a life insurance medical exam.
Your habits under the microscope
Wallace says that underwriting using driving records should help many consumers obtain more affordable life insurance. “They could be rewarded for their good records when applying for life insurance,” he says.
Life insurance companies may soon look at your shopping habits as well, Pledge predicts. Reward cards issued by grocery stores make it possible to see whether you buy a lot of junk food or healthier fresh fruits, vegetables and whole grains.
Pledge says he wouldn’t be surprised if underwriters devised an algorithm using shopping or other marketing data to determine an applicant’s risk. Do you have a gym membership? That information also could help life insurers judge risk, Pledge says.
Any available personal data could potentially become fodder for life insurance underwriting.