Are Auto Insurers Readying for a War on Horsepower?

The freedom to drive fast in a powerful car is fundamental to the mystique that auto makers use to sell cars. Now, as if the auto industry didn't have enough trouble, come more signs of a looming war on horsepower and speed.

The average horsepower for new cars has risen steadily since 1985, both in absolute terms and in terms of horsepower per 100 pounds of vehicle weight. A 1981 Honda Accord had a base engine with just 75 horsepower. A base model 2008 Accord has a 177 horsepower four-cylinder engine, and you can buy a six-cylinder model with 275 horsepower. As recently as the mid-1990s, that would have made the current Accord more powerful than a Cadillac Eldorado.

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Meanwhile, motorists are stepping on the gas, especially since the demise of the national 55 mile-per-hour speed limit in 1995. the average vehicle speed exceeded the posted limit on freeways in eight urban areas monitored by the Insurance Institute for Highway Safety. (The cities were Albuquerque, Atlanta, Boston, Denver, Los Angeles, Omaha, Tampa and Washington, D.C. The Institute didn't visit Detroit, evidently. No need. We Motowners tend to view speed-limit signs as reminders of the minimum speed required to justify taking up space on the freeway.)

It's not just environmentalists who are casting disapproving eyes on these trends.

"All this power on U.S. roads has translated into higher insurance losses," the Insurance Institute for Highway Safety says in its latest "Status Report, a regular newsletter that highlights issues of concern to the insurance institute research arm. The IIHS is perhaps best known to consumers as the sponsors of the crash tests that are staples of television news magazines. Over the years, the IIHS has helped push auto makers to develop and make available a number of important safety technologies such as side-curtain airbags.

The IIHS highlights a study released earlier this month by its sister organization, the Highway Loss Data Institute, that concludes insurance losses have been rising steadily since 1985, as cars have become more powerful.

The HLDI study compares the insurance losses of a 2005 Pontiac Grand Am, a midsize General Motors Corp. car that had a 140 horsepower engine, to a 2005 Nissan Altima, outfitted with a 3.5 liter 260 horsepower engine.

"Collision losses for the more powerful Altima are an estimated 20% higher than for the less powerful Grand Am for rated drivers 25-64," according to the Insurance Institute's summary of the study. That means that an Altima driver living in an urban area could expect to run up an average of $339 in collision losses on an annualized basis compared to $283 for a similar driver behind the wheel of a Grand Am.

It's not as if the auto insurance industry has overlooked the potential for mayhem posed by high performance cars. Just for fun, I put myself through the surprisingly intrusive process of asking the Lizard of Auto Insurance (Why do they need to know what industry I work in? When they figure it out, would they let me know?) how much it would cost to put collision coverage on a fictional 2004 Pontiac Grand Am SE, compared to my actual 2004 Subaru WRX sedan.


Daimler
Will cars like this Mercedes Benz CLK 63 AMG Black Series with a V8 engine that produces 507 horsepower get swept away in a war against speed and power?

Surprise, surprise: The Lizard would want $530.30 every six months to provide collision coverage to my 227-horsepower Japanese pocket rocket, compared to $260.30 for similar coverage on the Plain John Pontiac. (Good news: GM is making it easier to buy used Pontiacs by listing them on eBay.)

Still, the Insurance Institute/HLDI conclusion that higher horsepower correlates to increased insurance-claim losses across the board -- for younger and older drivers -- isn't a welcome development for the industry or consumers who like cars with larger power-to-weight ratios.

The same issue of the Insurance Institute newsletter contains approving reports on the use of cameras to monitor speed and issue speeding tickets. In Montgomery County, Md., outside of Washington, D.C., the installation of speed cameras in certain 35 mile-per-hour speed zones dropped the proportion of vehicles driving 10 miles per hour over the limit by 70%, the IIHS reports.

In Scottsdale, Ariz., a well publicized test of speed cameras on the Loop 101 highway also coincided with a substantial drop in speeding. The share of vehicles traveling faster than 75 miles per hour on the road fell to 1-2% from 15% before the cameras were installed, the IIHS reports. Arizona officials now are considering broader use of speed cameras.

Speed cameras are part of a bigger debate America is having over whether potential improvements in public safety are worth surrendering another increment of privacy and freedom to the state.

Opponents of speed cameras protest that such monitoring violates motorists' privacy, since where you are and who you are with in your car ought to be your business. To neutralize that argument, speed camera proponents counter that the systems can be designed to photograph the license plate, not the occupants.

Taken as a whole, the IIHS's broadside against power and speed -- launched amid the bigger debate over the automobile's role in our energy and environmental problems -- should represent a warning to car makers and automotive enthusiasts. There's a backlash building against the idea of the car as an unassailable icon of freedom and power. America has changed since the late 1960's. The car culture may have to as well.

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