Recent Report Provides Valuable Insights into Auto Insurance Claims
According to a recent analysis published by the Insurance Research Council, the United States had a considerable increase in the severity of vehicle claims throughout the years of the epidemic.
It was claimed that the severity of claims began to increase in the middle of the 2010s, but the frequency of auto claims has decreased over the past two decades.
Since the commencement of the pandemic in the year 2020, it was discovered that the number of claims had decreased even further, while the severity of claims had increased.
According to the study from the IRC, the increase in claim severity was most noticeably seen in vehicle damage claims. This was in part driven by inflationary pressures on the costs of auto body repair labour and replacement parts for vehicles.
On the other hand, the frequency of claims was found to be decreasing at a rate that was more than 2% lower year over the course of the IRC’s 20-year study period beginning in 2002 and continuing until 2022. This was shown to be notably true for physical damage liability claims as well as bodily injury claims.
According to the president of the IRC, Dale Porfilio, during the first half of the study period, the average loss costs remained essentially the same despite the fact that the frequency of losses was decreasing while their severity was increasing.
This changed as claim frequency levelled out and claim severity accelerated, he continued, with the average payment per insured vehicle for most coverages beginning to climb gradually until the decline in 2020 due to COVID-19. This was owing to the fact that the average payment per insured vehicle for most coverages began to climb.
“By 2022, average loss costs for nearly every coverage had surpassed the 2019 level,” said Porfilio, who also serves as the chief insurance officer for the Insurance Information Institute (Triple-I). Porfilio is a member of the Insurance Information Institute (Triple-I).
Additionally, the research highlighted significant developments in vehicle claims, including shifts in the following areas:
Claim Frequency: The claim frequency for automobiles had been going down on a long-term basis due to advancements in safety technology, but it started to level off in the middle of the 2000s. Even after the COVID-19 pandemic caused a substantial reduction in claim frequency in 2022, the number of claims per insured vehicle remained lower than it was before the pandemic began. This trend continued through 2022.
Claim Severity: The average payment per claim for the majority of coverages increased gradually over the course of the study period, with both physical damage (PD) and bodily injury (BI) claims increasing by more than 4.5 percent on an annual basis.
The analysis found that the average payment made for each covered car grew by more than 2.4 percent throughout the course of the research period. This increase was true for both bodily injury and property damage claims. This rise was primarily caused by higher claim severity, which more than compensated for the reduction in claim frequency that occurred during this time period.
The most recent analysis from IRC is the latest installment in a long-running series of studies that examines developments in the insurance business. For the purpose of describing personal car trends on a national and state level, it utilised data from a variety of sources, including the National Association of Insurance Commissioners and the Fast Track Monitoring System.
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