Report on Auto Insurance Trends Offers Key Insights to Drive Profitability

Source: LexisNexis | Published on May 12, 2023

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The annual LexisNexis® Risk Solutions Auto Insurance Trends Report explores how trends in U.S. consumer auto insurance shopping, driving violations, claims frequency and severity, vehicle safety features and more are impacting the auto insurance policy lifecycle from quote to underwriting to claims.

Throughout 2022, U.S. auto insurance carriers continued to navigate a precarious mixture of increased costs, limited vehicle sales, rising accident severity and regulatory pushback on proposed rate increases, setting the market on a collision course away from profitability.

The 2023 report examines key trends from the previous year and offers insights to help insurers make better business decisions now – and into the future.

Claims Severity Rose in 2022

Every claims parameter percentage increased during 2022, following the upward trend that began when people got back on the roads as the pandemic shutdowns subsided in 2020.

Here are two notable statistics from our report. Since 2019:

  • Bodily Injury and Property Damage severity have increased by 35%
  • Collision severity has increased by roughly 40%

These findings directly correlate with the increase in Total Loss claims, which accounted for 27% of Collision claims for the first nine months of 2022―up from 24% for the entirety of 2021. Increases in the number and severity of claims can put pressure on claims units, which are already struggling with staffing shortages.

The good news is, automated solutions that quickly deliver comprehensive claims data directly into your workflow not only help make your adjusters’ lives easier, they help you process claims faster―and that can be a big boost for customer satisfaction.

Because customer satisfaction is a significant focus for claims departments, we sought to better understand the correlation between the customer claims experience and a policy holder’s decision to switch insurers―the ultimate expression of dissatisfaction.

In August of 2022, we surveyed roughly 1,400 customers who had filed a claim within the past 12 months. We asked a series of questions about the claims experience, ranging from the overall process to digital claims filing options and payments. We discovered that a combined 94% of respondents were either very satisfied or somewhat satisfied with their claims experience―67% and 27% respectively. However, we found that just because customers report some level of satisfaction with their claims experience . We found that 33% of respondents still switched insurers or considered switching following their claims experience.

Telematics

Growth expands beyond the Top 10 U.S. insurers

Investment in telematics continues to gradually expand among all insurers, with a growing number expressing interest in exchange-based solutions. That’s good news for consumers of all sizes, who express a very positive sentiment about telematics. Providing the opportunity for a more personalized risk assessment based on driving behavior can only improve the relationship between insurers and customers.

In our 2021 survey of the top 50 U.S. insurers, 68% of respondents stated they believe telematics offers a competitive advantage while 32% considered it a competitive requirement. Close to one in three (30%) are already engaged with an exchange-based solution.

Exchange-based solutions are beneficial to insurers that have limited internal resources. Smaller insurers often lack enough proprietary data and capability to generate scores on their own. This type of solution is much more cost-effective than running an independent telematics program.

An exchange-based solution can help you price with greater accuracy so you can better protect your book of business while providing a more personalized experience for your customers. This can be a crucial competitive advantage, especially during a hard market.

Violations

Miles driven and violations go hand-in-hand

You can’t look at one without considering the implications for the other. In 2022, both miles driven and violations returned to near pre-pandemic levels. Total miles driven in 2022 were just 5% lower than in 2019. Miles driven per week per vehicle were 92% of 2019 baseline for December.

While the violation mix continues to evolve, some of the most dangerous violations – including speeding, DUIs and distracted driving – are close to or even exceed pre-pandemic levels.

Speeding

In 2022, major speeding violations were more than 20% above 2019 rates, largely due to increases in the northeastern states, which have large population centers.

Minor speeding crept above 2019 levels for the first time in 2022. Although the increase is less than the relative increase in major speeding, its growth rates are just as concerning. 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.

DUI

DUI levels in 2022 continue to align very closely to 2019 levels, more so than vehicle miles traveled. However, unlike other violations, DUIs take longer to move through the court system, so they can be a lagging metric. While our observation is that the incident rate for 2022 is closely in line with 2019 levels, we anticipate future reports will identify growth rates above 2019.

Law enforcement officials have reported seeing a steep increase in drunk driving cases since the start of the COVID pandemic that has dramatically increased each year since. Some locales have seen significant increases in DUIs, especially daytime DUIs.

Distracted Driving

Post pandemic, there’s been a steady uptick of distracted driving violations as compared to miles driven, especially in 2022. There were three months during 2022 where volume exceeded 2019 for three generations: Baby Boomers, Generation Z and Traditionalists. Generation Z continues to be the most problematic age group when it comes to increases in distracted driving.