While homeowners and small commercial continue to grow in importance within the Massachusetts insurance marketplace, the auto insurance marketplace still reigns as the most important line of business for many insurers, and their agents, who do business here in the Commonwealth. As such, Agency Checklists thought that the following study recently published by the Kennedy School of Government at Harvard may be of interest to our readers.
The report, entitled “the $64 Billion Massachusetts Vehicle Economy”, was written by Linda Bilmes and published in December 2019 as part of the Faculty Research Working Paper Series. The 27-page report, took at a look at the total annual cost of the vehicle economy in Massachusetts, determining that when all is said and done, the vehicle economy here totals approximately $64.1 billion.
Breaking down the numbers
The report notes that the Massachusetts vehicle economy is based on approximately “37,000 miles of public roads, adjacent parking areas, and 4.5 million private passenger cars and light trucks. Of the $64.1 billion vehicle economy, half of the amount of, or $35.7 billion, is born by the public via “…the form of state budgetary costs, social and economic costs (road injuries and deaths, congestion, and pollution) and the value of land set aside for roads and parking.” The remainder, or $28.3 billion, is made up of the consumers via the financing, insuring, and operating of their private passenger vehicles.
The annual cost of the Massachusetts Vehicle Economy
|Public costs||$35.7 Billion||55.7%|
|Consumer costs||$28.4 Billion||44.3%|
|Grand Total||$64.1 Billion||100.0%|
Among the observations based on these numbers include estimates that the Publicly Borne Costs of the vehicle economy amount to about $14,000 per Massachusetts family, whether or not they own a vehicle. Second, much of this so-called vehicle economy is “subsidized by non-road users”. As for Indirect Social and Economic Costs, the amount incurred by the public via these less obvious means totals $21.3 billion. Among the largest and most tragic is the estimated “$10.5 billion in fatalities and injuries” as the result of vehicle collisions.
Another indirect cost to people is the time lost in traffic. According to the study, Massachusetts residents lose a whopping $4.6 billion in lost productivity due to time spent in traffic. Those that have it worst, are drivers in the Boston-area who are calculated to spend an average of 164 hours in traffic each year.
The following chart depicts the breakdown of the various vehicle economy costs: