Q2
APD Profitability Rebounds Even as Casualty Challenges and Trade Concerns Escalate
As of Q2 2025, the U.S. auto claims and collision repair industry has shown signs of stabilization, with continued headwinds in the casualty space. Key performance indicators across both segments reflect improved underwriting results, easing cost pressures in some areas, while ongoing concerns around loss severity and social inflation continue. At the same time, the broader economic environment remains uncertain, with potential tariff impacts and other global trade dynamics introducing new cost and supply chain pressures that could affect repair costs and claims handling in the months ahead.
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Q2 APD Insurance and Collision Repair Trends
Return to Profitability
The P&C industry’s net combined operating ratio (NCOR) improved substantially in 2024, falling to 96.6% – a 5.1-point improvement from 2023 and the lowest level since 2013.
Personal auto contributed meaningfully to this result, closing 2024 with a 95.3% NCOR, marking a 9.6-point improvement year-over-year. This rebound is especially notable given the line’s prior performance, with NCOR at 112.2% in 2022. Key drivers of this turn-around include consecutive years of net written premium growth – 14.4% in 2023 and 12.8% in 2024 – as well as improved loss ratios, particularly in APD, which is now tracking 16 points lower than liability.
Commercial auto, on the other hand, finished 2024 with a 107.2% combined ratio. Despite this being a 2.1-point improvement year-over-year, the line is expected to remain unprofitable through 2026. Commercial auto insurers had been less aggressive in taking rate leading into 2024. The line saw net written premiums increase by 10.7% in 2024 (up from 8.0% in 2023) and is anticipated to see an additional +10.8% increase in 2025. Unlike personal lines, commercial lines were profitable from 2021-2024, while personal lines failed to operate at an underwriting profit between 2021-2023.
The industry also saw a moderation in motor vehicle insurance cost increases. As of April 2025, the Consumer Price Index (CPI) for motor vehicle insurance rose 6.4% year-over-year – a marked slowdown compared to the 22.6% increase reported in April 2024. Improved underwriting results and loss costs are likely contributing to this trend.
Despite these gains, total loss frequency is trending upward. Through April 2025, 22.6% of all losses – and 23.5% of non-comprehensive losses – were declared total losses, a 0.9-point increase year-over-year. Contributing factors include declining used vehicle values, shifting vehicle age mix, and lower claims volumes. Adjusted vehicle values are down 2.0% year-over-year, averaging $13,445.
Repairers are adjusting to these shifts with mixed results. While overall claims volume remains below pre-pandemic levels, improved insurer performance has helped stabilize workstreams and provided some predictability in demand. However, margin pressure persists. Labor costs remain elevated amid technician shortages, and shops continue to contend with parts availability issues, especially for newer and ADAS-equipped vehicles.
The increasing complexity of repairs – reflected in calibration procedures appearing on over 31% of DRP estimates in Q1 2025, up significantly from 23.9% a year ago – is also adding time and cost to the repair process. Shops that have invested in diagnostics, training, and process automation are better positioned to manage these pressures and maintain throughput.
Q2 Casualty Insurance Trends
Inflation and Escalating Severity
In contrast to APD, casualty claims remain a pressure point for insurers. Claims frequency in bodily injury (BI) and uninsured/underinsured motorist (UM/UIM) categories continues to rise, even as personal injury protection (PIP) and auto property damage (PD) frequencies fall. BI claims now represent over half (51%) of total indemnity dollars paid, despite accounting for less than 25% of all PD claims, highlighting an escalation in claims severity as well as frequency.
Social inflation continues to play a defining role in loss costs, as nuclear verdicts in all liability lines increase in both frequency and magnitude, according to a recent study. Auto medical billing inflation is also outpacing the medical care CPI, led by rising severity and increased utilization in radiology, surgery, and evaluation and management categories.
These trends are compounded by earlier use of advanced procedures, such as outpatient surgeries and MRIs, as well as a notable uptick in alternative treatments like Platelet-Rich Plasma (PRP) therapy and Extracorporeal Shock Wave Therapy (ESWT).
Future Outlook
While the auto claims and repair segments show clear signs of recovery, the casualty insurance sector continues to face intensifying pressures from medical inflation, legal system dynamics, and rising claim severity. As we enter the second half of 2025, sustained focus on repair network performance, cost containment, strategic pricing, and investments in digital technologies to improve claims management will be critical to maintaining profitability and navigating the uneven road ahead.
APD Industry Data
Paid Claim Trends
Paid claim frequency for collision and comprehensive (both first party coverages) continue to trend down slowly. Underlying drivers of frequency – paid count and exposure units – both continue to decline despite the overall growth within the car parc. Liability (property damage) paid frequency remains stable.
Through March 2025, miles driven was +0.5% relative to 2019 and +0.6% versus prior year. Don’t let these seemingly small numbers fool you. In 2024, the U.S. averaged over 273 billion miles driven per month. A 0.6% increase year-over-year is over 4.45 billion additional miles driven. (Figure 1)
Wholesale used vehicle values are generally reflecting an increase relative to prices that bottomed out between Q2 and Q3 2024. Recent reporting indicates year-over-year used vehicle value increases (Manheim) and values just below where they were in 2024 (Black Book).
Retail prices, reflected in the BLS CPI for used vehicles are also trending higher after hitting a low point at the end of Q3 2024. Supply and demand dynamics, including price and interest rates, remain at the top of my watchlist for 2025. (Figure 2)
Total losses continue to represent a larger share of claims. Contributing factors, such as declining vehicle values, aging car parc, and a declining share of lower dollar claims being reported, continue to shift the claims mix. (Figure 3)
The share of claims flagged total loss was a record in 2024 – based on CCC’s historical trends. Declining used vehicle values and an aging car parc, on top of catastrophic events, drove these results. Over 70% of total loss valuations in 2024 were on vehicles 7 years or older. Through Q1, 74% of valuations are on vehicles 7 years or older. First quarter results indicate a 1-point increase in the share of total losses year-over-year. (Figures 4 and 5)
The age mix of non-comprehensive valuations is highly representative of the vehicle age mix within the U.S. car parc. Older vehicles continue to represent a large share of the vehicle pool, while we see less representation from newer vehicles, a reflection of decreased new vehicle sales since 2020. S&P Global reported that the average age of U.S. light vehicles has increased to 12.8 years – 14.5 years for passenger cars and 11.9 years for light trucks.
Average adjusted vehicle values (AAVV) on non-comprehensive valuations were –2% year-over-year through April. AAVV was -4.4% in 2023 and declined another -6% in 2024. Through April, AAVVs are +39% relative to 2020. (Figure 6)
Per NICB, over one million vehicles were stolen in 2022 and 2023. In 2024, thefts declined 16.7% year-over-year to 850,708. Following a slight reprieve, the latter part of 2024 began to see an increased share of total losses as a result of theft. However, Q1 2025 saw a sharp decline in the share of total loss thefts.
Despite the decline, the market still seems ripe for morale hazard and fraud given the state of auto finance – where almost 3% of auto loans slipped into serious delinquency in Q1 2025 and 25% of new vehicle loans are under water by an average amount of almost $7,000 (Q4 2024). (Figure 7)
(CY 2016-2025, by Quarter)
Total Cost of Repair Trends
The average total cost of repair (TCOR) finished 2024 between at over $4,730, or +3.7% year-over-year. This is the lowest increase since 2017. Through Q1 2025, average total repair costs are +1.1% year-over-year, though this is likely to develop further.
Increases in repair costs have been mitigated by the increase in total losses and age mix. However, there are a variety of underlying factors which continue to put upward pressure of repair costs, including labor rates, part prices, and diagnostics. (Figure 8)
Part dollar contributions to repair cost increases continue to shrink relative to labor and miscellaneous costs – which often include diagnostics. (Figure 9)
Average part prices had been relatively flat between 2022 and 2023. However, prices did begin to show signs of inflation beginning in Q2 2024. Part prices are generally the top concern for the repair ecosystem as the U.S. braces for the effects of tariffs. Though less evident in the early months of 2025, March and April both indicate year-over-year increases in excess of 4%. (Figure 10)
Industry part utilization was down slightly in 2024 at 13.6 parts per repair estimate. Initial results for Q1 indicate a further decline in the average number of parts per repair – down ~0.4 parts per repair. Much of these results, which could still be developing (supplements, etc.), may be attributed to repairable age mix and increased total losses. (Figure 11)
Like part volume, average labor hours saw a slight decline in 2024. Initial results for Q1 indicate a notable decline in the average number of labor hours per repair – down ~0.9 hours per repair, though this result, too, could still be developing (supplements, etc.). This could be attributed to repairable age mix and increased total losses. (Figure 12)
Labor rates – as reported to CCC through insurance claims, etc. – continue to be a major driver of year-over-year repair cost increases. Q1 2025 saw a 3.2% increase relative to Q1 2024. Like the 4.5% average increase in 2024, this reflects a slowing rate of increase. 2023 was +7.5% year-over-year. Average labor rate increases continue to near the inflation rate as we close out Q2. (Figure 13)
As we discussed previously, ADAS features continue to proliferate. This is reflected in the continued increase in appraisals that include diagnostic operations - namely, scans and calibrations. The share of DRP appraisals that included a scan reached nearly 87% in Q1 2025, while calibrations trended towards 32%.
The inclusion of calibrations is accelerating at a rate similar to what we saw with scans in recent years and implies a continued increase in repair costs. While nearly 92% of scans are included in the initial DRP estimates, the majority of calibrations appear on supplements, requiring additional review and approval time while vehicles are in the process of being repaired. (Figure 14)
Shop Productivity Trends
Method of inspection trends reflect a continued reliance upon direct repair programs to complete appraisals on behalf of insurance carriers. Carriers continue to evolve their mix of inspection solutions to meet the needs of their clients and long-term staffing and operations objectives. An increased total loss propensity adds additional pressure in getting vehicles to the right place – a shop or salvage yard – the first time. (Figure 15)
Shop backlogs continue to improve on a year-over-year basis. Where we saw more heavier hit vehicles being repaired in 2022 and 2023, decreased vehicle values has increased total loss frequency, accounting, at least in part, to improved cycle times. Claims volumes, which remain down year-over-year, are also contributing to improved backlogs. (Figure 16)
Improved backlogs and increased total losses are also reflected in improved cycle times. The average time between last estimate assignment sent and vehicle in (to the shop) are almost half of the days required in Q1 2023. Overall repair days remain down ~2 days in total from their peak yet remain up by 4-5 days relative to 2020. Factors such as increased supplement handling and technician shortages could be contributing to elongated repair times. (Figure 17)
The share of non-driveable repairable claims were up +0.3 percentage points in Q1 2025. Daily productivity – measured by labor hours per repair day, indicated modest, yet noticeable improvements year-over-year, especially with non-driveable vehicles. Given the increased propensity for repairs to include supplements, productivity improvements will likely rely upon improved communication and process efficiency between shops and insurance carriers. (Figure 18)
Casualty Industry Data
Third Party Trends
Bodily injury claim frequency has been increasing despite property damage and PIP claim frequency decreasing over the last 2 years. (Figure 1)
Average 3rd party bodily injury paid outcome is now $29.1K per injured party, which represents an 11% increase since Q4 2023 and a 36% increase since Q4 2020. (Figure 2)
As of Q4 2024, BI dollars now make up the majority of liability indemnity dollars paid. (Figure 3)
Third party bill line severity has increased 4.1% since Q4 2023.Both first and third party auto medical billing inflation rates have been consistently outpacing the CPI for health care. (Figure 4)
Third party bill line severity has increased 8.9% since Q1 2024. (Figure 5)
Largest severity increases in key volume states since Q1 2024 have occurred in Illinois, California, Colorado, Virginia, and Texas. (Figure 6)
Distribution of procedure dollars shows increases in Radiology, Evaluation & Management, & Surgical as of Q1 2025. (Figure 7)
Drilling further into procedure category gains, price increases occurred in all subcategories, with bill frequency increases also occurring for CT scans, MRIs, surgeries, injections, and most evaluation and management. (Figure 8)
Average days between date of loss and treatment continues to decrease for outpatient surgery and diagnostic procedures, with notable cost increases on those same procedures. (Figure 9)
PRP procedures (0232T, P9020) continue to increase rapidly in frequency. PRP code 0232T is now the 6th highest surgical procedure by total dollar amount billed. (Figures 10 & 11)
The percentage of third-party claims submitted for injuries caused by an uninsured or underinsured motorist continues to increase (+5% since Q1 2024). (Figure 12)
First Party Trends
PIP claim paid outcome per injured party has increased 11% since Q4 2023. (Figure 13)
First party bill line severity has increased 8.4% since Q1 2024. (Figure 14)
For key volume states, the most notable line level increases since Q1 2024 have occurred in Oregon, California, Colorado, and New Jersey. (Figure 15)
Distribution of procedure dollars shows notable increases in radiology, surgical, evaluation and management, durable medical equipment (DME), and pharmacy/drug as of Q1 2025. (Figure 16)
Drilling further into growth categories, movement is driven by both cost and frequency increases within most procedure subcategories. (Figure 17)
Extracorporeal Shockwave Therapy (ESWT) procedures are increasing in frequency. The vast majority of utilization is in Florida, where it is the second-highest surgical code by dollar amount billed with an average of 9 procedures per injured party.
This procedure is classified as experimental and is not reimbursed by Medicare or most private insurance. (Figures 18 & 19)
Disclaimer
The information and opinions in this publication are for general information only, are subject to change and are not intended to provide specific recommendations for any individual or entity. Although information contained herein has been obtained from sources believed to be reliable, CCC does not guarantee its accuracy and it may be incomplete or condensed. CCC is not liable for any typographical errors, incorrect data and/or any actions taken in reliance on the information and opinions contained in this publication.
Note: Where CCC Intelligent Solutions Inc. is cited as source, the data provided is an aggregation of industry data related to electronic appraisals communicated via CCC's electronic network or from total loss valuations processed by CCC. Where CCC Casualty is cited as a source, the data provided is an aggregation of industry data collected from claims data communicated via CCC Casualty’s electronic network.
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