Auto Claim Severity Up 35% Over Pre-Pandemic Rates: LexisNexis Report

Claim severity for bodily injury and property damage increased by 35% since 2019, while collision claim severity has jumped 40%, LexisNexis Risk Solutions says in a new report.

The data broker’s 2023 U.S. Auto Insurance Trends report says the amount of traffic on U.S. roadways plummeted after the onset of the pandemic in March 2020, but volumes returned nearly to pre-pandemic levels last year. Total miles driven in 2022 were just 5% lower than in 2019.

But motorists are driving like the roads are still empty. The report says the number of major speeding violations were up 20% above 2019 rates, “largely due to increases in the northeastern states, which tend to have large population centers.”

Minor speeding violations surpassed 2019 levels for the first time since the pandemic. “Although the increase is less than the relative increase in major speeding, its growth rates are just as concerning,” the report says. “This development is significant, as minor speeding represents the single highest category of moving violations, and is also one of the highest total volume categories.”

LexisNexis said the number of violations may reflect an effort by law enforcement to crack down on speeding in light of documented evidence that motorists are driving faster and corresponding increases in traffic fatality rates.

“Essentially, more tickets are being given today per each mile driven,” the report says.

There was one note of good news: The report noted that the total number of fatalities on U.S. highways dipped 0.2% during the first three quarters of 2022 compared to the same period in 2021.

Auto claims data does not reveal any hint of improvement. LexisNexis said bodily injury claims were 8% to 10% higher than the prior year, on top of a more volatile surge in 2021 that led to the total bodily injury claim cost increase of 35% since 2019.

Growth in property damage claims also moderated in 2022 to an 8.5% increase, but that still led to the 35% jump over 2019 property damage costs, the report says.

Collision claim severity was up 9% in 2022 compared to 2021, for a total increase of 40% over the pre-pandemic 2019 level. The share of claims that resulted in total losses also increased, to 27% of collision claims in 2002 from 24% in 2021.

LexisNexis said the increase is significant because total loss claims take more time and effort, often requiring adjusters to manually search for data from multiple sources.

The report says inflation also played a role in the increase in severity. The cost of motor vehicle parts and equipment increased 10% over the prior year, according to U.S. Bureau of Labor Statistics data. Repair costs increased by 19% during that period.

The report says increased adoption of advanced driver assistance systems (ADAS) may provide an antidote for rising claims costs. They have proven to be very effective in reducing accident rates and claim frequency.

Some ADAS features are more effective than others. LexisNexis said many combinations of ADAS features lead to loss cost reductions of 5% or less, but others reduce costs by 20% to 25%.

Increased adoption of electrical vehicles, which generally are equipped with ADAS, may also tend to decrease loss costs, the report says.