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MONTHLY REPORT
Volume 13, Issue 9
September 2013


Members

Commissioner Jim Donelon
Theodore "Ted" Haik, Jr., Chair
Jeff Albright, Vice Chair

Ray Aleman, Jr.
Lee Ann Alexander
J.E. Brignac, Jr.
Paul Buffone
Stephen F. Campbell
Sheriff Greg Champagne
Representative Greg Cromer

Louis G. Fey, Jr.
Michael Guy
Chris Haik
Lance "Wes" Hataway
Ron Henderson
Senator Eric LaFleur
Scott Landry
LTC John A. LeBlanc
Robert Moorman
Senator Dan "Blade" Morrish
Representative Kirk Talbot
Earl Taylor


Staff


Terrell B. Moss, Director

David Evans,
Supervisor/Research Analyst

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Roundabouts – A Turn Towards Improved Safety and Traffic Flow

It has been 10 years since Louisiana opened its first roundabout traffic circle in Lafayette at the intersection of LA highways 93 and 342. Since then the Louisiana Department of Transportation and Development (DOTD) has implemented the design at intersections in parishes across the state and has plans for more. In Baton Rouge, there is a newly constructed roundabout on LSU campus at Dalrymple where it intersects with two other streets heavily congested with vehicles, cyclists, runners, and walkers.

A common European traffic intersection feature, the roundabout is distinguished from older-style traffic circles and rotaries, such as the South Circle in Alexandria. A modern roundabout’s more compact design forces drivers to slow down to 15-20 mph and requires entering traffic to yield the right-of-way to circulating traffic whereas traffic circles and rotaries often require vehicles to merge into traffic.

One result is increased safety over conventional intersections controlled by traffic signals or stop signs. The most severe types of crashes that occur at intersections – right-angle, left-turn and head-on – are rare at roundabouts because of the slow speeds, one-way circulation, and right turn entry and exit. According to the Federal Highway Administration, roundabouts can reduce fatalities as much as 90 percent, injuries crashes 76 percent, and pedestrian crashes 30 to 40 percent. DOTD reported in its 2011-2012 Annual Report a 35 percent reduction in all crashes at roundabout intersections.

Another positive result is improved, more efficient traffic flow at intersections previously controlled by signals or stop signs. The slow speeds required to negotiate the roundabout actually aid the smooth movement of more vehicles into, around, and out of the intersection. According to one report, the replacement of the traffic signal in Abita Springs at the intersection of LA 59 and LA 36 with a roundabout in 2007 eliminated a 15 to 20 minute delay during peak traffic.

In spite of these positives, roundabouts are not the solution for every intersection. Many of the DOTD roundabouts are built in rural areas. Large, arterial crossings with three or more lanes of traffic moving in both directions are still more safely controlled by traditional methods. In fact, the Insurance Institute for Highway Safety conducted a study earlier this year on a pair of two-lane (as opposed to single-lane) roundabouts in Washington state and found that while injury crashes were appreciably reduced and traffic flow improved, the number of property-damage-only crashes rose. Even a year after construction drivers remained confused about right-of-way, speed, and driving next to tractor-trailers.

Nevertheless, expect to see more roundabouts in Louisiana, not only because they are safer and more efficient, but because construction cost is comparable to signaled intersections and they are cheaper to maintain.


 LPCIC Meeting

The Louisiana Property and Casualty Insurance Commission met last month with topics including the National Flood Insurance Program (NFIP), Louisiana Citizens Property Insurance Corporation (Citizens), worker’s compensation and the surplus lines market.

Insurance Commissioner Jim Donelon addressed the Commission on Louisiana’s dependence on the NFIP, his participation in a federal roundtable on the possibility of privatizing it, the NFIP reforms enacted last year, the devastating economic impact that the swift move to actuarial rates will have on the coastal areas in Louisiana outside FEMA-certified levees, and the efforts of the state’s congressional delegation to moderate that impact. The Commissioner pledged his support to the delegation and said that a year of rate relief was probable, but more permanent relief beyond that would be difficult to secure.

The CEO of Citizens, David Thomas, briefed the Commission on his immersion into his new position over the previous five weeks. Based on his interaction with staff, he feels Citizens is prepared for hurricane season and anticipates success in the seventh round of de-population.  Mr. Thomas also discussed other ongoing Citizens issues, goals, and plans.

Wes Hataway, Director of the Office of Workers’ Compensation (OWC), and Paul Buffone, Sr. Vice President/ Chief Claims & Information Officer of the Louisiana Workers’ Compensation Corporation discussed the workers’ comp market in the state.  Mr. Hataway presented information on his agency’s successful implementation of the medical treatment guidelines and its impact, as well as, the success of other OWC initiatives in vocational rehabilitation and workplace safety.  Mr. Buffone presented an employer/insurer perspective that recognized the favorable trends and improvements of recent years, but focused on remaining issues, such as the reasons the state has been and remains a high claims cost state, the impact of being one of the few remaining wage-loss states, retroactive application of the medical treatment guidelines, and pharmacy utilization costs.

Curt Eysink, Executive Director of the Louisiana Workforce Commission, presented information to alert the LPCIC members to the rapidly approaching dramatic growth in industrial construction and chemical manufacturing that will impact coastal regions of the state in the next few years. The influx of new workers needed to fill the new jobs and to replace retiring baby boomers will affect not only worker’s comp, but other insurance lines like auto and homeowners as well.

Scott Landry, Vice President of Lane & Associates, Inc., presented an overview of the surplus lines market, including the necessity of surplus lines, characteristics of the market, products, utilization in Louisiana and elsewhere in the country, and the elements of this past legislative session’s Act 203.

Usage-Based Auto Insurance: Surveys Show Consumer Interest High But Sales Are Low

The “Monthly Report” continues to write on usage-based auto insurance (UBI) primarily because it seems a direct, effective way for an insured to realize premium savings by proving good or preferred driving behavior through actual monitoring of how, when, and how much they drive.

Back in December 2010 the LPCIC’s Auto Ad Hoc Committee – in its exploration of ways to reduce the high cost of auto insurance in the state – received a detailed presentation from Progressive on UBI and its latest product, Snapshot. This year’s January edition of the “Monthly Report” included an article on the increasing number of insurers offering or developing a UBI product in expectation that UBI would grow to 20 percent of the vehicle insurance market within five years. A survey at the time indicated that approximately two-thirds of respondents were willing to change their driving behavior in order to save 10 percent on their car insurance; 76 percent of those were willing to have a device monitor their driving to achieve the savings.

Two surveys released in recent weeks –one by Towers Watson, the other by LexisNexis Risk Solutions– continue to indicate and define considerable driver interest in UBI but that interest has not yet translated into the anticipated growth in sales. LexisNexis found that only 3 percent of respondents use UBI.

Towers Watson’s survey revealed that 79 percent of respondents were open to purchasing UBI and that figure rose to nearly 90 percent, if it was guaranteed that their premium would not increase. Interest is highest among the drivers that pay the most: the young, those who drive more and those with newer vehicles. In addition to being used to raise premium, respondents were also concerned that UBI-collected data would be used to violate privacy and to invalidate claims. LexisNexis found similar concerns.

Towers Watson detected consumer interest in additional value-added services that could be provided through a UBI data-collection device. These included vehicle theft tracking, automated emergency response, vehicle wellness reports and real-time, relevant driver feedback. Parents showed strong interest in various safety services for their children. The majority of drivers are still willing to change their driving behavior in conjunction with UBI. Younger drivers show the highest interest in this driver coaching.

LexisNexis’s commissioned survey focused on consumer awareness of UBI, acceptance, inducement incentives and value-added services. They found that respondents’ awareness of the product had more than tripled from the 10 percent indicated in 2010. Interest rises with incentives such as the offer of a 3-month trial period or an automatic 10 percent discount for the first six months. The prevalence of smartphones suggests the success of a UBI mobile “app.” As with Towers Watson, respondents express an interest in a broad range of value-added services.

It could be concluded from the two surveys that consumer concerns and slow UBI sales can be overcome with the offering of value-added services provided through a UBI data-collection device. The ultimate reward would be not just the premium savings to the individual insured but, through improved driving behavior and greater highway safety for us all.

Sources: Towers Watson, “Insights, Usage-Based Insurance Consumer Survey, Understanding What Customers Want,” September 2013
LexisNexis Risk Solutions, “Consumers & Usage Based Insurance, 2013 Consumer Research Results”
PropertyCasualty 360, “All About the Money: Interest in UBI Grows on Savings Potential,” 9/4/2013 and “Survey: Auto Insurance Buyers Willing to Try UBI for Premium Discounts, “ 8/22/2013

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