& Memorandum U.S. Department DEFT OF TRAM^PORWION of Transportation CCl. ::IJ National Highway Traffic Safety •:q A ii:3u Administration Subject: ACTION. Submittal to the Docket No.: Date: J^'- ^ 8 2009 NHTSA-2006-24175; CY 2003 Annual hisurer Report and Liformation under 49 U.S.C, Section 33112(c). From: Stephen R. Kratzke A_/-«^^"^^^^^^ J^/y^ ^^P'y ^° Associate Administrator iw.^v. V \jS^t^/j^ Attn of: NVS-130 Rulemaking To: U.S. Department of Transportation Docket Thru: O. Kevin Vincent Chief Counsel Please put the attached calendar year (CY) 2003 insurer report in Docket No. 2006-24175. Attachment •--••Ti/^" I jy/j \ MYI Consulting Information Efficiency Experts Analysis of Insurer Reports Received Pursuant to Section 33112 of the Title 49 of the United States Code 2003 Reporting Period Annual Report Preparedfor National Highway Traffic Safety Administration Washington, D.C. 20590 Under Contract DTNH22-07-C-00060 Prepared by MYI Consulting, Inc. 36 East Fifth Street, Suite #101 Chester, PA 19013 NHTSA 2003 Report EXECUTIVE SUMMARY «.«„««« .—^ -. 1 1 Introduction ,,«....»«*.»......««.»«.«»»«««»«»^..«w.,.«.,....««««.»««<*M»«.ii*>i>«>t^»«*Mi<ipi>i»>wiw««*»«>**""*»«»«'»"««**«»«*»«'»*«^^^ 2 Overview of 2003 Insurer and Leasing Company Sli^iC^ssions uAder the Theft Act —.... .~.4..~...~.«... 1 3 Thefts and Recoveries of Motor Vehicles Dui^^^^ J*4^jii«-~.~~~~ -^a»-».»^ 1 4 Setting Rates for Motor Vehicle Comprehensive Co'|c»^|3«uring 2003. ~~..^...^....«... .2 5 Insurance Losses from Motor Vehicle CompiebajSH^iiWlil^thirtrtg 2003 ......»I..~..««-~.~....».3 6 Programs to Reduce Comprehensive Premiums Durtjog 20(^'~.~~.~.»~.»~.—..................~........~..~..~~.....~~...~. 3 7 Insurer Actions to Encourage Reductions in Vehicle uie^ During 2003.....................~.........................~»~.«....~3 1 INTRODUCTION 4 1.1 Background 4 1.2 Legislative Requirements Affecting the Ihsurai^ ln4ustTy 5 1.3 Legislative Requirements Affecting the Oepktn^ Of TVaosportation 5 1.4 Insurer Reporting Requirements 6 1.5 Organization of this Report 6 1.5.1 Table 1: Organizationof this Report.;. 7 2 OVERVIEW OF 2003 INSURER AND LEASING COMPANY SUBMISSIONS UNDER THE THEFT ACT...............~.........~..........................M...~.~~.m..u~.«~.MM.~..»..~~~.~.~..~.~.................»....«.....w.~...~..~>..»~».ll 2.1 Insurance Companies Filing 2003 Reports«..>. .• 11 2.1.1 Table 2. List of Insurance Companies Filing 2003 Reports 12 2.2 Rental and Leasing Companies Filing 2003 Repotts 13 2.3 Insurer Compliance with Reporting R«q(ilr^mantSw...... 13 2.3.1 Table 3: List of Rental and Leaslh| Goti#i^is Filing 2003 Reports 14 2.3.2 Table 4: 49 CFR Ch. V (ia-l-66'Ed|l«Mi^tit4.5 - § 544.7 15 3 THEFTS AND RECOVERIES OF MOTOR VEHICI4S bURING 2003 16 3.1 Thefts and Recoveries by Vehicle Type w... 16 3.2 Thefts and Recoveries Reported by Irtstoa^ Cdl^panles 17 3.2.1 Table 5: 2003 Thefts & Recoveries of Insured Model Year 2000 - 2004 Vehicles 18 3.3 Thefts and Recoveries Reported by Rental ipd i<#$tja8 Companies 20 3.4 Procedures to Obtain Theft and Recovery I3#»..,.,^,;...,...... 21 3.5 Notifying Insurance Companies of Motor Vehicle Tlwfts and Recoveries 22 3.6 Insurance Industry Procedures to Ensure AccurateTlieft and Recovery Data 22 3.7 Uses of Theft and Recovery Data 23 4 Setting Rates For Motor Vehicle ComprelwQiive CQ,yMM|e During 2003....................~.............»>...«».......... 24 4.1 Basis for Comprehensive Premiums and PrQitniutSf%talties for Vehicles with High Theft Rates 24 4.2 Rating Characteristics Used to Establish Comprehensive Premiums 25 4.3 Other Rules and Plans to Establish Comprehensive Premiums and Premium Penalties 27 4.4 Maximum Premium Adjustments for High Risk Vehicle Groupings 27 4.5 Designated High Risk Lines 28 4.5.1 Table 6: Typical Designated High Risk Lines During 2003 Anerican Family 29 4.5.2 Table 6: Typical Designated High Risk Lines During 2003 California State Auto. Association.... 30 4.5.3 Table 6: Typical Designated High Risk Lines During 2003 California State Auto. Association 31 4.5.4 Table 6: Typical Designated High Risk Lines During 2003 CA State Auto. Association 302 5 INSURANCE LOSSES FROM MOTOR VEHK2LE CS^MPREHENSIVE POLICIES DURING 2003 33 5.1 Comprehensive Claims Paid By Insurers During 2003 33 5.1.1 Table 7. Number of Comprehensive Claims Paid By Reporting Ins. Co. (2003) 34 5.1.2 Table 8. Theft Claims Paid by Reporting Ins. Co. (2003) 35 NHTSA 2003 Report 5.1.3 Table 9. Number of Thefts Reported By Leasing Co. (2003) 36 5.1.4 Proportion of Theft Claims Due to Vehicle Theft 36 5.1.5 Table 10: Proportion of Theft Claims Paid Due to Vehicle Theft (2003) 36 5.2 Insurance Losses Under Comprehensive Coverage During 2003 37 5.2.1 Table 11: Losses Under Comprehensive Coverage Paid by Reporting Ins. Co. 2003 37 5.3 Losses Due to Theft 38 5.4 Insurer Losses Due to Theft 38 5.4.1 Table 12: Theft Losses Paid by Reporting Ins. Co. (2003) 38 5.5 Proportion of Theft Losses Due to Vehicle Theft 39 5.5.1 Table 13. Percentage of Comprehensive and Theft Losses Due to Vehicle Theft (2003) 39 5.6 Vehicle Theft Losses Reported by Rental and Leasing Companies 40 5.6.1 Table 14: Vehicle Theft Losses ($) Paid by Reporting Leasing CO (2003) 40 5.7 Net Losses Due to Vehicle Theft 41 5.8 Dollars Recovered by Insurers through the Sale of Recovered Vehicles and Parts 41 5.8.1 Table 15: Dollars Recovered by Reporting Co. From Sale of Recovered Vehicles (2003) 41 5.8.2 Table 16: Total Number and Amount of Claims for Premium Penalty Vehicles (544.6(d)(2)( vii)) 42 5.9 Proportion of Money Retrieved Which Resulted from Vehicle Thefts 43 5.9.1 Table 17. Proportion of Dollars Retrieved which Arose from Vehicle Theft (2003) 43 5.10 Comprehensive Claims for High Risk Vehicles 44 6 PROGRAMS TO REDUCE COMPREHENSIVE PREMIUMS DURING 2003 45 6.1 Insurer Actions To Reduce Comprehensive Rates And The Conditions To Qualify For Rate Reductions 46 6.2 Number of Rate Reductions Issued in 2003 47 6.2.1 Table 18. Vehicle and policyholders receiving premium reductions 2003 47 6.2.2 Table 19: Difference in Comprehension 48 6.3 Size of Discounts Offered by Insurers 48 6.4 Eligibility Criteria for Anti Theft Rate Reductions 49 6.4.1 Table 20. Typical Devices Qualifying for Anti Theft Credits 50 6.5 Thefts and Recoveries of Vehicles with Anti Theft Devices 51 7 INSURER ACTIONS TO ENCOURAGE REDUCTIONS IN VEHICLE THEFTS DURING 2003 52 7.1 Actions to Assist Reduction in Vehicle Thefts 52 7.2 Policy Regarding Used Parts 57 7.3 Conclusions 61 7.3.1 Table 21: Theft and Recovery of vehicles receiving Anti Theft Discounts (2003) 62 7.3.2 Table 22. Number of reported vehicle thefts for vehicles up to four years in age 62 7.3.3 Table 23. Percent Recoveries of passenger cars and their condition 63 7.3.4 Table 24. Percent Recoveries of non-passenger cars and their conditions 63 7.3.5 Table 25: Theft Claims (including Contents) and Losses for all vehicles regardless of age 64 8 REFERENCES 65 9 Summary Tables A Theft and Recoveries 2000-2004 for Passenger Cars B Thefts and Recoveries for 2000-2004 for Light Trucks C Thefts and Recoveries for 2000-2004 for Heavy Duty Trucks D Thefts and Recoveries for 2000-2004 for Multi-Purpose Vehicles E Thefts and Recoveries for 2000-2004 for Motorcycles F Thefts and Recoveries for 2000-2004 for Rental & Leasing Co's G Summary of Insurance responses to NHTSA 10 Appendices A through G (for complete list of appendices see file attachment). NHTSA 2003 Report 1 EXECUTIVE SUMMARY 1 Introduction Measures to reduce and eliminate the tJKeft l>f atil^lQobUes have been taken sii^pe the Dyer Act, also called the National Motor Vi^Ksli "WiS Act (18 U.S.C.A. § 2311 et seq.), was enacted to impede the interstate traffidkiii|| O^^^dn vehicles. Fifty years Ifter the Dyer Act was implemented congress fiiitliitf^^^^ife?#4^ Highway Traffic "Safety Administration (NHTSA) to issue Federai^l<|i^fV«hiele Safety Standards (JSMVSS) and Regulations. In order to decrease the ^M$(|t ilMp^ vehicle theft and facilitaite tlie tracing and recovery of stolen motor vehicles aj^jfif^ili 1984 Congress enactid the Motor Vehicle Theft Law Enforcement Act (P«|||(ji|^|>8-547). As a result the Department of Transportation implemented the Federal^l\|ijlbr Vehicle Theft Prevftntipn Standard (FMVTPS), requiring manufacturers of c^i||)ipp hi|h-theft passenger car; lines to put a Vehicle Identification Number (VIN) on itt^ f^i#» ^1 transmission, and 1? oth^r major body parts. The NHTSA has and will c<ifi^ii^ jtoMtor and analyze cur^nt auto theft trends and introduce new and innov8^i#||iiilidi^ tir address the problem of Idwering vehicle theft as it relates to vehicle saftty. " 2 Overview of 2003 Insurer and Le«$iiig^<^|0gqifMny Submissions under the Theft Act For the total of 22 reporting firms, 17 were insurdpce companies and 5 rentid and leasing companies were submitted for the 2003 repo^l^g period. Vehicle theft and recovery data was also received from the Insurance Services Q|i^ce (ISO) for some of the insurers. In order to generate an accurate and real time understanding of how the measures taken to reduce auto theft impacts motorist, a mandatory technology-based reportiil; system for the larger insurers to utilize should be coiDSiSeoed. Such a system will maintain data accuracy and data integrity so that af^ropflatb auto theft deterrent mieasures can be initiated based on a well-informed decision. 3 Thefts and Recoveries of Motor Vefaic^During 2003 The marking of parts is intended to assist 4aw/«Bfprcement efforts to trace and recover stolen vehicles and parts as well as an;esfje^fioseeute the criminals responsible.