Personal Automobile Insurance
More Accidents, Larger Claims
Drive Costs Higher
October 2016
Insurance Information Institute  110 William Street  New York, NY 10038
212.346.5500  [email protected]  www.iii.org
The Big Problem:
Insurance Costs Are Rising
Auto Insurance Increase in Loss Costs, 2014:Q1–2016:Q1
Bodily Injury
9.6%
Property
Damage
14.7%
Personal Injury
Protection
18.4%
Collision
Comprehensive
11.1%
11.0%
From early 2014 to early 2016, the cost of accidents
has risen dramatically. By contrast, consumer prices overall
rose 1.7 percent during 2014 and 2015.
Source: Fast Track Monitoring System.
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More Accidents
Collision Claims: Frequency Trending Higher in 2015
5%
4.4%
4%
Annual Change
3%
2.5%
2.4%
2%
0.9%
1%
0.8%
0%
-0.5%
-1%
-2%
-1.4%
-1.8%
-1.8%
-2.4%
-3%
-4%
2005
-3.6%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
The accident rate – the number of claims
per hundred vehicles – is rising.
Source: Fast Track Monitoring System, Insurance Information Institute.
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Why More Accidents?
More Driving
More Miles Driven, More Collisions, 2006–2015
Billions of Miles Driven
in Prior Year
3,150
Miles Driven
Overall Collision Claims per
100 Insured Vehicle Years
6.0
Collision Claim Frequency
5.9
3,100
5.8
3,050
5.7
3,000
5.6
2,950
5.5
2,900
5.4
2,850
5.3
15:Q4
06:Q4
07:Q4
08:Q4
09:Q4
10:Q4
11:Q4
12:Q4
13:Q4
14:Q4
People are driving more. The more miles people drive,
the more likely they are to get in an accident.
Source: Federal Highway Administration, Rolling Four-Qtr Avg. Frequency from Fast Track Monitoring System,
Insurance Institute for Highway Safety, Insurance Information Institute.
4
Why More Accidents?
More Jobs
More People Working and Driving => More Collisions, 2006–2016
Number Employed,
Millions
145
Overall Collision Claims per
100 Insured Vehicle Years
6.0
Collision Claim Frequency
Number Employed
5.9
140
5.8
135
5.7
130
5.6
5.5
125
5.4
120
06:Q1
07:Q1
08:Q1
09:Q1
10:Q1
11:Q1
12:Q1
13:Q1
14:Q1
15:Q1
5.3
16:Q1
People are driving more because the economy is improving.
Source: Seasonally adjusted employed from Bureau of Labor Statistics, rolling four-quarter average frequency from Fast Track
Monitoring System, Insurance Information Institute.
5
Accidents Are Getting More Expensive
Collision Claims: Severity Trending Higher in 2009–2015
5.7%
6%
5%
Annual Change
4%
4.1%
3.9%
3.1%
2.8%
3%
2%
1.3%
1%
0.1%
1.3%
0.5%
0%
-0.1%
-1%
-2%
-2.3%
-3%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
The average claim size has risen steadily since 2010.
Source: Fast Track Monitoring System, Insurance Information Institute.
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Why Are Accidents More Expensive?
Repair Costs
Cost of Body Work Is Rising Faster Than Costs Overall
140
Body work
Overall inflation
135
130
125
120
115
110
105
100
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
The cost of repairing autos is rising faster than overall inflation.
Indexed so 2004 = 100.
Source: Insurance Information Institute, Bureau of Labor Statistics.
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Severity: Driving Fatalities Are Rising
On Track for 18%
Increase in Two
Years
Annual Change in Motor Vehicle Deaths
10%
8%
Seatbelt Use Rose
to 62% of Drivers,
From 49% in ‘90
9.0%
8.0%
Big Drop-off Due
to the Great
Recession
6%
3.6%
4%
2%
2.2% 2.0%
1.5%
0.7%
2.2%
1.0%
3.1%
0.9%
0.4%
0.1%
0.1%
0%
-0.1%
-0.4%
-2%
-0.1%
-1.4%
-2.5%
-4%
-3.0%
-2.4%
-2.9%
-6%
-5.9%
-8% -7.0%
-9.5%
-9.0%
-10%
Driving has been getting safer for decades, but recent trend is
discouraging—38,300 deaths in 2015.
Source: National Safety Council, Insurance Information Institute.
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