Persisting Casualty Severity Trends in the Post-Pandemic Landscape
It’s no secret that the onset of the COVID-19 pandemic in the spring of 2020 resulted in massive, sustained disruption to many aspects of our day-to-day personal and professional lives.
As we progressed further into 2021, most of the country reestablished some semblance of normality. Restaurants and bars reopened, air travel increased, we went on destination vacations, and our kids returned to school. Life started to feel almost “normal” again, right?
By that rationale, those of us with a close eye on auto physical damage and casualty trends in the insurance industry might have also expected things to return to what we observed pre-pandemic. The reality is somewhat different, as we continue to observe some contradictory trends:
- Impact severity remains high.
- An increasing percentage of vehicles are non-drivable.
- Airbag deployments continue to rise.
These trends have continued despite a full or partial reopening of the economy for most of the country. To gain a better understanding of these dynamics, we will examine the “what,” “why,” and “so what” behind these trends in greater detail.
What Are We Seeing?
Even with fewer collisions overall, crash impact severity continues to increase. As a result, casualty claim severity — the average submitted medical specials per injured party — is also on the rise. In a 2020 report, the National Highway Traffic Safety Administration (NHTSA) underscored the link between collision severity and resulting injuries, showing that more severe crashes resulted in a higher rate of fatalities and traumatic injuries.
Delta-V (DV) — the change in velocity that a vehicle experiences during a collision — can provide insight into the potentially destructive forces in a crash and their impacts on severity. If we examine the average Delta-V for all CCC auto physical damage claims by created month (Figure 1), we see the score has remained .5 mph higher (7.2 vs 6.7) than the 2019 baseline through at least July 2021. This may not sound like much, but even this small variance is significant when distributed across millions of records.
Figure 1: Impact Severity Remains Above Pre-Pandemic Levels
If we view that same data set via distribution of all Delta-V scores by claim folder count (Figure 2), we see that a larger percentage of the DV scores are in the higher severity ranges (8 to 20 for both 2020 and 2021 year-to-date).
Figure 2: Larger Percentage of Delta-V Scores Fall Into High Severity Ranges
Other troubling indicators include the percentage of claims with airbag deployment (Figure 3) and the percentage of claims marked as non-drivable (Figure 4). For both metrics, the percentages showed notable increases post-onset of the pandemic in 2020, but those same percentages have climbed even higher in 2021.
Figure 3: Larger Percentage of Claims with Airbag Deployment in CY 2021
Figure 4: Larger Percentage of Non-Driveable Vehicles in CY 2021
Why Do These Trends Continue?
According to recent research from SAGE journals, post-pandemic daily traffic patterns have shifted. Daily accident frequency used to peak during traditional “rush hour” periods (Figure 5). Now, with much of the population continuing to work remotely and hitting the road at less predictable times, we have observed a flatter accident frequency distribution throughout the day.
Figure 5: Daily Accident Frequency Trends Shift From Pre-Pandemic “Rush Hour” Peaks
Seasonal driving trends have also been disrupted. Prior to the pandemic, we saw a consistent yearly pattern where front impact percentage would peak during the holiday season, and rear impact percentage would peak during high-volume summer months with maximum road congestion (Figure 6). In April 2020, the pattern diverged. Front impacts did not fall as much as they usually do, and they continued to climb to an unprecedented peak over the last holiday season.
Figure 6: Primary Impact Share of Overall Appraisal Volume for Collision and Liability Losses by Year & Quarter
Additionally, the pandemic has significantly affected the types of vehicles observed on roadways. Private passenger vehicles saw huge decreases post-pandemic and continue to recover into 2021 (Figure 7). Conversely, truck interstate travel surged past passenger vehicle interstate travel over the same period.
Figure 7: Truck Interstate Travel Surges Past Passenger Interstate Vehicle Travel
Decreases in daily private passenger travel and increases in commercial traffic were also reflected in CCC estimatics data. Utility vehicles and lights trucks made up a notably higher percentage of the vehicles by appraisal count in 2020 and 2021 year-to-date (Figures 8 and 9).
Figure 8: Collision Loss Category – Percent of Overall Appraisal Count by Vehicle Type
Figure 9: Liability Loss Category – Percent of Overall Appraisal Count by Vehicle Type
Less congestion on the roadways has led to increased speeds and a higher probability for fatal crashes. Prior to the pandemic, we saw only minor increases in fatal crash probability percentage as the speed above reference level (speed limit) increased. During the pandemic period, we have seen that same probability rise sharply once the speed was more than 10 mph above reference level.
Police linked alcohol and drug use as factors contributing to more crashes post-pandemic. This increase in inebriated drivers combined with higher speeds and less congestion has translated into more serious crashes and fatalities. The percentage of incapacitating or fatal collisions more than doubled baseline to post-onset (1.5% to 3.3%).
So, what can we expect moving forward?
From a casualty perspective, we have seen the frequency of first-party (i.e., Med-Pay, PIP) bills (Figure 10) and third-party (i.e., BI, UM/UIM) packages partially recover since spring 2020, but the frequency will likely remain below the pre-pandemic baseline for an undetermined period.
Figure 10: Claim Frequency Remains Lower, But Is Recovering
At the same time, we will likely see continued medical procedure cost inflation at the bill line (Figure 11) and package levels with some top procedures outpacing U.S. Consumer Price Index (CPI) benchmarks.
Figure 11: Continued Inflation at the Bill Line Level
Additionally, we will likely continue to see a lower percentage of “generalized” soft tissue primary diagnosis codes (e.g., pain/spasm, sprain/strain) and a higher percentage of nerve and disc injury primary diagnosis (Figure 12).
Figure 12: Increased Percentage of Soft Tissue Nerve and Disc Injury Primary Diagnoses
Finally, these diagnoses trends will translate into continued increases in the percentage of charges attributed to surgical procedures such as spinal injections, arthroscopy and anesthesia (Figure 13).
Figure 13: Increased Percentage of Charges Attributed to Surgical Procedures
It’s a strange new world, and the chips will continue to fall in unprecedented and interesting ways. For that reason, CCC is highly committed to proactive, frequent sharing of key insights for the benefit of our business partners.
To learn more about CCC’s First- and Third-Party solutions, please visit our Casualty Claims page.