The number of auto insurance collision claims filed in 2022, though rising, remains below pre-pandemic figures, while average claim costs have raised, industry information providers CCC and Mitchell have reported in their study of trends affecting the insurance and repair industries.
The two companies’ analysts pointed to profound alterations in driving patterns and rising parts prices, both impacted by COVID-19, as key issues likely to continue in the months ahead.
However, the two differed on a few of the drivers of change. CCC, for instance, delved deeply into the pandemic’s impact on traffic patterns as well as their impact on increased accident severity, while Mitchell — whose report was issued as of their parent company, Enlyte — examined the “urban exodus” that work-from-home has fueled.
The two also agreed that parts prices have risen, but differed within their focus on the causes, with CCC keying in on supply-chain disruptions, and Mitchell more deeply examining the effect of inflation around the price of recycleables.
CCC’s report, “The Continued and Forecasted Impact of the Pandemic around the P&C Insurance Economy,” and Enlyte’s report, “Enlytened: 2022 Trends Report,” were released within days of each other. The report focusing on Mitchell data, “Three Economic Trends Transforming Auto Insurance,” is among seven chapters inside a document which presents findings from Enlyte’s Genex and Coventry divisions.
First, two conclusions
The reports sounded similar themes in their conclusions.
“The COVID-19 pandemic led to unprecedented declines in miles driven in CY 2022 and changing traffic patterns in CY 2022 that may be temporary or permanent,” CCC industry analyst Susanna Gotsch concluded. “A lot of companies continue to keep those employees that may work remote outside, delaying earlier plans to return employees to work in Q4 2022 to early CY 2022. These new traffic patterns have resulted in more severe car accidents and better fatality and injury rates despite lower claims overall compared to CY 2022 pre-pandemic benchmark.
“Supply disruptions from COVID-19 still drive higher inflation in recycleables and labor shortages and resultant higher wages continue to plague many industries, and no clear end is within sight. Businesses still adapt, and resilience and innovation remain essential. Moving forward, businesses will need to further evaluate key issues like supply-chain sourcing, hybrid work, and the way to best make the most of rapidly evolving technologies like digital, AI, mobile and cloud to enhance collaboration and drive efficiencies into the process,” Gotsch wrote.
“While last year's shelter-in-place restrictions changed consumer preferences and accelerated virtual claims handling, they also affected miles driven, accident frequency and policyholder premiums,” concluded Ryan Mandell, the director of claims performance for Mitchell's Auto Physical Damage division. “Now, after nearly 2 yrs, the economy is slowly rebounding, even just in spite from the Delta variant. However, COVID-19's affect on commute patterns, population redistribution and also the current cost of recycleables promises to have a long- lasting impact on automotive claims and proper, safe vehicle repair.”
Claims on the increase
CCC and Enlyte agreed the number of claims has risen, but is still below 2022 levels. CCC reported the number of non-comprehensive claims is up 9 percent versus 2022, but still 15 percent below 2022 numbers. Enlyte said the amount of “repairable claims” had risen a complete 24.36 percent from 2022, but stands 2.3 % below 2022 numbers.
CCC also took a look at the number of appraisals done. “In April of 2022, overall appraisal counts for collision and liability loss categories fell by over -50 percent versus April 2022. But while liability losses from May-December 2022 continued to determine overall appraisal counts hover between -25 and -30 percent lower than exactly the same period in CY 2022, monthly overall appraisal counts for collision losses experienced a lesser decline.”
Enlyte predicted that, as business travel returns and much more companies prepare their employees for any return to work, “claims volumes will probably grow, potentially even exceeding pre-pandemic levels by the end of this year.”
With some 40 percent of U.S. workers now working remotely, and office occupancy rates hovering around 30-35 percent in 10 major cities, traffic patterns have changed, the CCC report says. “Telematics data shows that historical rush hour patterns have changed and driving in different locations and also at different times of day has grown,” it says. That’s significant, because traffic density, such as during rush hour, is directly related to crash rates.
CCC cited data from Arity showing that through the start of 2022, total miles driven had rebounded to exceed pre-pandemic levels by July 2022, and that mileage by time of day was up across the board throughout 2022. Leading that trend were mileage driving during weekday nights and weekday middays, both of which had historically been less than morning and evening rush hour.
These changes have contributed to a general increase in crash severity, CCC said. In a month-to-month comparison, the percentage of collision claims where the vehicle was non-drivable was higher in each and every case in 2022 of computer have been in 2022 and 2022, based on CCC’s data.
The regions in which those drivers are racking up their miles are shifting, too, Enlyte reported — so it suggested might present start up business opportunities for repairers. As more Americans work remotely, states with lower population density and overall taxes, such as Florida, Texas and Tennessee, have population growth, at the cost of states like Illinois, Chicago and New York, Enlyte said, citing census data.
Effects on repair costs
Collision vehicle repairs are running well in front of those for liability losses, CCC reported, although liability losses have seen a shift of losses in to the higher repair cost brackets in the last five years.
“The rate of increase in both repairs and total loss costs over the four quarters ending Q2 2022 however are some, if not the most important increases we have seen, and are predominantly being driven by global supply chain disruptions and shortage of workers in many fields,” CCC said.
CCC discovered that parts sellers, who have been operating with smaller inventories, were unprepared for that rebound in the interest in parts, leading to backorders. Many parts that are available, it said, may be stuck overseas, because of bottlenecks at ports around the globe.
Thanks to people factors, and to the runup in prices for recycleables, the typical cost per part has risen by a lot more than 6 percent in 2022, the largest increase since 1997. Meanwhile, CCC blamed increasing complexity of vehicles for the increase in the average quantity of replacement parts needed per repair.
Enlyte place the rise in the average repairable severity at 3 %, according to Mitchell’s estimating data. “Even though some expense could be related to advancements in automotive technology and complexity, inflation can also be to blame-driving higher parts prices because of government spending, logistics imbalances, a rise in the price of recycleables and other factors,” Enlyte said.
According to the U.S. Bls, the price of consumer goods rose .9 percent in June 2022 within the previous month, and stood 5.4 % greater than in June 2022. In the automotive industry, a rise in oil prices has led to a 45.7 percent spike within the cost of making new steel between July 2022 and July 2022. Oil prices have also were built with a follow-on effect with toluene and isomer mixed xyline, primary ingredients within the making of automotive clear coat, and polyolefin, utilized in making bumper covers.
Mitchell’s data on the average cost of OEM parts prices shows consistently rising prices for some of the very most commonly replaced parts during the period of 2022, Enlyte said. For instance, prices for the 2022-2022 Toyota Corolla hood, 2022-2022 Dodge Challenger front bumper cover and 2022-2022 Kia Soul left fender have raised by 6.85 %, 6.96 percent and 8.51 percent, respectively, between July 2022 and July 2022. Before 2022, prices had been relatively stable.
“If commodity prices still rise or perhaps remain elevated, we may receive an additional rise in prices throughout the all the entire year and into 2022,” Enlyte advised.
Total loss vehicle values rises
The effect of computer chip shortages on automobile production continues to be well documented. Based on Cox Automotive, total sales in August 2022 were just 1,092,302, “among the lowest monthly total inside a decade – and at the lowest volume since April 2022, when the global COVID pandemic initially turn off U.S. businesses.”
With this shortage, the typical listing price for used vehicles has soared to record heights, CCC said. Prices in August were 24 percent higher than the same month in 2022, and 34 percent greater than 2022, CCC said.
This, in turn, has led to increases as a whole loss values, the report said. “Unfortunately, with the semiconductor chip shortage likely to continue into 2022, the industry may experience elevated total loss vehicle loss costs for some time,” CCC said.