Auto insurer starting a big `carrot' for sober, accident-free driving

To combat drunken driving, a penalizing ``stick'' is often used: jail, fines, revoking one's license, jacking up insurance rates. Now -- for the first time -- a major auto insurance company is using a ``carrot'' to encourage sober driving.

The Sentry Insurance Company will reward people who don't drive while intoxicated with a cash refund: half of their total auto insurance premium.

``Good drivers who use alcohol responsibly or not at all should benefit from their stand,'' said Sentry chairman Larry Ballard in an interview here.

Robert Hunter of the National Insurance Consumer Organization (NICO) agrees: ``The insurance industry has done too little to give incentives for safety. This is certainly a welcome step.''

To get the Sentry refund, motorists must have a claim-free record for five years after signing up for the policy. On the sixth year, policyholders will be sent a check for half of their first year's premium. They will get a similar check for each year of claim-free driving thereafter.

For example, if a driver pays a $500 premium for 1986, he may get $250 back in 1991. If in 1987 his premium goes to $550, then in 1992 he may get $275 back -- as long as Sentry doesn't have to pay out a claim for an accident (alcohol-related or not).

There is a stick that goes with the carrot. The ``Payback'' policy requires drivers to sign an agreement that if they are involved in an accident while legally intoxicated, they forfeit their collision and uninsured-motorist coverage. In other words, the driver pays for any damage to his vehicle and for damages beyond the minimum provided for motorists without insurance.

To qualify, motorists must be 25 years old, have a clean driving record for the past three years, and drive a car that's less than 10 years old.

The policy is now available only in Wisconsin, where Sentry is based. In the next few weeks, it plans to file for approval from state insurance commissions in Illinois, Ohio, Missouri, Indiana, and Georgia. It has not yet made plans to file in the larger ``no fault'' insurance states such as New York, New Jersey, Massachusetts, and Michigan.

``We're taking this on a state-by-state basis,'' says Robert Fischer, a Sentry vice-president.

``The big question is, `Will other companies follow?' '' notes Harvey Seymour of the Insurance Information Institute (III), an industry trade group.

Several big auto insurance companies contacted say they will be watching closely. ``This is something completely new. It will be interesting to see if it works,'' comments Robert Sasser of State Farm Insurance, the largest auto insurer in the United States.

Mr. Sasser notes that the first portion of the Sentry plan is a variation on the ``accident free'' discount plan that most insurers offer. For instance, State Farm offers a 5 percent discount off the premium for drivers who would qualify for the Sentry policy. ``You don't have to wait five years for this,'' Sasser says.

Mr. Hunter at NICO adds: ``I wouldn't buy without shopping around first.'' If another company offers lower rates, drivers may be able to save more than at Sentry. ``And this [Sentry policy] locks you in with the company if you want to get your premium back,'' says NICO.

With sales of $1.4 billion in 1985, the Stevens Point, Wis., firm ranks among the top 50 property and casualty insurance companies in the US, according to the III.

The change should add to Sentry's bottom line, attracting drivers with no recent accidents, and reinforce a commitment not to drive while intoxicated. Mr. Ballard, Sentry's chairman, says: ``Our hope is to get high-quality risks in abundant numbers.''

After five years, the company expects 30 to 40 percent of the Payback policyholders to get the refund.

The policy was premi`ered in Wisconsin because the insurance company is based there, but the state also has a higher level of admitted drunken driving than the national average, according to a Louis Harris & Associates poll conducted in March.

Almost 4 out of 10 Wisconsin residents say they drive after drinking. Nationally, the average is less than 3 out of 10. Only 20 percent of those polled in Wisconsin claim total abstinence, compared with a national average of 33 percent.

The III estimates that alcohol-related accidents cost $24 billion annually. A 1981 study in New York showed that 50 percent of all auto insurance claims go for losses from alcohol-related accidents. Of some 44,000 motor vehicle fatalities last year, about 24,000 were alcohol related.

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