LexisNexis Insurance Trends Show Increase In Claims Frequency And Severity

LexisNexis Risk Solutions has released its 2022 Auto Insurance Trends Report, which shares insights about insurance shopping trends, the effect of reduced car sales on the adoption of ADAS, and the rebound of miles driven in the USA. It also looks at changes in driving behaviour and factors causing trend shifts in claims severity and virtual claims processing.

Despite a slowdown in the volume of vehicles entering the market in 2021, the number of vehicles equipped with ADAS increases with each new model year.

A recent LexisNexis study revealed vehicles with ADAS features had an eight per cent reduction in collision claim loss cost compared to similar non-ADAS vehicles.

“When you consider that 46 per cent of the insured vehicle population is comprised of vehicles with model years 2014 and after, and 51 per cent of those vehicles are ADAS equipped, ADAS has the potential to influence claim performance on a significant portion of the car parc,” LexisNexis said.

The company said TD Economics believes inventory could return to levels similar to 2019 by the end of 2022 or the beginning of 2023, which should have a positive impact on ADAS adoption.

Miles driven in 2021 almost rebounded to the 2019 benchmark level, with mileage per week / per vehicle in the last quarter of the year down five per cent. The last two weeks of 2021 showed a drop in miles driven compared to 2019 of approximately nine per cent, likely due to a surge in omicron variant COVID-19 cases.

With a return in 2021 to more normal driving patterns, there was a corresponding rise in claims frequency coupled with abnormal increases in claims severity.

Driving data analysis revealed changes in trip patterns. Rush hour driving volume was more prevalent on Mondays and Fridays, likely due to an increase in remote and hybrid work styles. The typical rush hour timeframe shifted slightly. Prior to the pandemic, peak rush hour was between 5pm and 6pm, however peak rush hour in 2021 was between 4pm to 5pm.

At the height of the lockdown in 2020, overall driving violations declined significantly. While overall miles driven rebounded in 2021, driving patterns were different than in the past. This included changes in commute patterns, an increase in riskier driving behaviours and altered enforcement and ticketing initiatives.

Speeding violations rebounded to 2019 levels in the second half of 2020, consistent with miles driven.

Data shows DUI violations trended down sharply during the initial shutdown in 2020. As of 2021, they rebounded close to 2019 levels.

Though Americans drove less in 2020, there were more than 40,000 traffic fatalities, the largest number since 2007. Many of these fatalities were attributed to distracted driving. In 2021, the number of distracted driving violations rose.

Shifts in driving behaviours are reflected in claims severity data. Year-over-year changes in severity began to moderate in April 2021 and briefly reached a negative year-over-year change in June 2021. LexisNexis said this is most likely the “mirror image” of the extreme spike experienced in the same time period in 2020, reflecting more normal patterns.

Collision severity trends had a sharp increase over the same periods. In August 2021, collision severity was up 23 per cent from the same time in 2020. The increase in collision severity also mirrors the upward trend in total loss claims. As of October 2021, approximately 23 per cent of claims resulted in a total loss.