The type of consumer owning a hybrid vehicle has changed and that change has resulted in an increased frequency of collisions. This trend was discussed in detail in the latest edition of Industry Trends Report of Mitchell International Inc. which offers business solutions to the insurance, collision repair and other related industries.
The publication’s feature article “Are Hybrids as Green when it Comes to Their Costs?” explained the shift in owner type. The first purchasers of hybrid vehicles (early adopters of the technology) were motivated by environmental concerns and as the report said “while their politics may have been liberal, their driving habits were conservative.” These drivers were wooed by insurance companies with discounted premiums.
As owning a hybrid became a solution to rising fuel prices the owner base shifted to drivers needing to commute longer distances and wishing to control their fuel consumption. The change in the makeup of these drivers resulted in a risk profile that was different from the early adopters. Other surveys and the statements of industry experts seem to indicate that the longer commute coupled with hybrid owners living in urban settings have contributed to “higher claim frequencies”.
Add to this the fact that hybrid collision repair costs an average of $182 more than a conventional gas only powered vehicle and you can understand the change in the risk profile.
Drilling deeper into the data, the author found two telling reasons for this higher cost. Labor charges for hybrids were higher indicating that more of the mechanical operations were performed by the dealer, and aftermarket part use was lower. The Mitchell study found that nearly 92 percent of both the cost and number of parts used to repair hybrids were OEM supplied while only 87 percent of the parts in non-hybrid repairs were OEM.
It may not come as surprise to anyone who has been cornered at a party by a hybrid owner that they are both proud of their vehicle and loyal to its brand. In a study Experian found that 47 percent of hybrid owners purchased another of the same brand. This compares with the industry standard of 35 percent.
After a crash, loyalty to the brand usually prevails and the owner will direct the driver of the wrecker to haul the damaged car to the nearest dealership. So both the increased frequency of claims and the higher costs generated by brand loyalty will almost certainly be reflected in higher insurance premiums for hybrid owners.