This Q1 edition of Crash Course 2024 focuses on a critical topic driving change across the industry: vehicle complexity and its ripple effect across key aspects of the claims and repair journey. From new state-of-the-art vehicle technology to the multifaceted nature of insurance claims, these dynamic variables have ushered in an era of unprecedented complexity, challenging the industry to evolve faster and smarter than ever before.
Crash Course delves into the factors behind the vehicle complexity increase, beginning with the automobile’s ascent from basic conveyance to today's high-tech marvels. It also explores the paradox this presents –– while vehicles may be safer and more capable of avoiding crashes thanks to technology, their complexity has led to more intricate and costly repairs and claims, with implications for the future of the industry as well as vehicle ownership. And finally, this edition of Crash Course also includes industry considerations to mitigate the effects of growing vehicle complexity.
In 1964, science fiction writer Isaac Asimov penned an article in The New York Times about a hypothetical visit to the 2014 World Fair in which he predicted the emergence of FaceTime, flatscreen TVs, high school coding courses, and even the Impossible Burger.
Among the many ideas he accurately forecasted were cars with “robot-brains,” otherwise known as autonomous vehicles. Little did Asimov know how close to this reality his prediction would be just 50 years later.
Fast forward 10 more years to 2024, and today’s cars are more complex than ever, placing the kind of pressure on the insurance and collision repair industries that even Asminov himself could not have predicted.
Complexity Creep
Today’s average passenger vehicles are highly instrumented. They’re safer, more reliable, and more comfortable, but they’re also more complex, with somewhere between 1,400 and 1,500 semiconductor chips (electric vehicles (EVs) have nearly double that amount) and roughly 30,000 parts. (Figure 1)
Figure 1: The Modern Vehicle
SOURCE: ECONOMIST WRITING EVERY DAY
Powering a vehicle’s safety, reliability, comfort, and autonomy are its electronic components, which account for 40% of a new vehicle’s total cost. This includes human-machine interfaces, collision warning, driver-assistance safety technologies (DAST), advanced driver assistance systems (ADAS), and more – all of which deliver enhanced crashworthiness and crash avoidance.
Yet, even with these technologies, at least 13 million motor vehicle accidents occur each year involving 23.6 million drivers and vehicles. As the prevalence of vehicle complexity grows, so does the impact that these “smartphones on wheels” will have on the industry and consumers when they’re involved in an accident, because complex vehicles are often trickier to underwrite and fix. This leaves the auto claims and collision repair industries struggling to keep up with the auto industry’s tech transformation, which requires not only new levels of technical expertise, but new industry infrastructure to support it.
In this report, we’ll uncover the factors driving the rise in vehicle complexity while exploring strategies to effectively navigate the changes, including opportunities to simplify processes and streamline operations. The report also includes data that quantifies the increase of vehicle complexity in terms of its impact on overall vehicle affordability and safety and assesses how much more complex vehicles may become in the years ahead.
While the allure of a cutting-edge vehicle is undeniable, it’s when innovation meets the road and an unforeseen crash occurs that the high cost of repairing these complex vehicles threatens to undermine the industry’s financial stability.
Collision repair shops and insurance carriers are making their way through this new era of complexity by investing in new skills training and technologies, part of a complex web of financial and strategic decisions they are making with their future often hinging on the outcomes.
Developing the right roadmap starts with understanding the factors contributing to the increase in vehicle complexity and the dynamic changes ahead.
When it comes to vehicle complexity, there are three main factors primarily responsible for the increase. The following explores each including data to help assess their significance.
Today’s vehicles are ultra-connected, high-tech, and structurally sophisticated. Electronics have been steadily integrated into cars to augment safety and autonomy, support infotainment and navigation, and provide system monitoring, onboard computers, connectivity, and more.
The addition of these lightweight materials, plus sensors, cameras, and other electronics, have contributed to an increase in the overall number of vehicle components, ramping up repair complexity and associated costs.
Research from AAA found that ADAS-equipped vehicles can add up to 37.6% to the total repair cost after a crash due to expensive sensors and calibration requirements.
Even minor incidents that cause damage to this technology found behind windshields, bumpers, and door mirrors can add up to $1,540 in extra repair costs.
AAA’s research determined the ranges listed below for typical ADAS repair expenses. Note that these numbers are for costs over and above the normal bodywork required following a collision.
SOURCE: AAA STUDY, 2023
The claims and repair costs of new vehicles have risen sharply over the last several years – due to higher manufacturing costs of the technology and parts to support comfort, safety, fuel economy, repair, and more. This has translated to higher costs for consumers, making new vehicles unaffordable for many.
Over time, however, auto manufacturers are expected to see the same benefits realized historically in other industries as technologies mature and scale. For example, advancements in technology, streamlined supply chains, and lower raw material costs have helped EV manufacturers in China sharply reduce their costs and improve affordability of their vehicles.
Inflation data confirms that the price of new technology eventually goes down even as product improvement goes up (Figure 2).
Figure 2: Consumer Price Index - 12 Month Percentage Change (U.S. city average, all urban consumers, not seasonally adjusted)
SOURCE: U.S. BUREAU OF LABOR STATISTICS
So, while the cost of new vehicles has continued to rise in all but two of the last ten years, new vehicle costs may begin to trend down like other new technologies. If the costs associated with repairing high-tech vehicles were to decline, this could lead to a positive shift within the insurance and collision repair industries.
Experian data shows that as of Q3 2023, there were nearly 290 million light duty vehicles in operation in the U.S. And while the average age of these vehicles is expected to grow to 12.7 years in 2024 (up from 12.3 in 2023), more of these vehicles than ever include ADAS.
Features like ADAS became more mainstream beginning in 2016, and in less than a decade, 2016 models and newer now account for nearly 40% of all light duty vehicles in operation in the U.S. (Figure 3). Many cars now include automated driving functions and most new vehicles incorporate Level 1-2 automation and safety features like Automatic Emergency Braking, or AEB.
Figure 3: Percent of U.S. Vehicles in Operation Calendar Year 2022
SOURCE: HEDGES COMPANY
In fact, the percentage of AEB-equipped vehicles across all major U.S. automakers grew from about 25% of vehicles in 2017 to just over 60% in 2019, reaching an estimated 95% of vehicles in 2023.
As more electronic content is added to vehicles with each new model year, the corresponding uptick in the number of scans, calibrations, and replacement parts needed per repair should come as no surprise.
Figure 4: Percent of Repairable Appraisals with Scan and Calibration Operations by Vehicle Model Year for Calendar Year 2023
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Figure 5: Average Replaced Camera/Sensor/Lidar/Radar Components per Repairable Appraisal by Vehicle Model Year for Calendar Year 2023
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
How Vehicle Complexity Is Redefining Risk and Repair
Despite having ADAS technology, vehicles like SUVs and pickup trucks – which accounted for 79.6% of all U.S. light vehicle sales in 2023 – have been shown to contribute to a higher risk of severe injuries or pedestrian fatalities in the event of a collision due to their increased horsepower, ride height, and vehicle weight.
And, as we’ve mentioned in previous reports, EVs typically have higher torque and accelerate more quickly which can potentially lead to more dangerous situations if not managed properly by the driver.
While some ADAS features are helpful for crash avoidance, others can potentially increase driver distraction and risk, such as speeding.
According to NHTSA’s July 2023 data, speeding-related fatalities increased by 19% between 2012 and 2021. The rise in speeding-related fatalities, despite the availability of crash avoidance technologies can be attributed to several factors:
Analysis of the AAA Foundation for Traffic Safety’s annual Traffic Safety Culture Index report reveals many drivers still admit to speeding and emailing/texting while driving (Figure 6).
Figure 6: 2022 Traffic Safety Culture Index Report. In the past 30 days, how often have you…?
SOURCE: AAA FOUNDATION FOR TRAFFIC SAFETY
Most ADAS technology is designed to avoid accidents altogether at lower speeds, and in aggregate tends to result in accidents that are less severe. While ADAS can prevent some accidents – particularly those at lower speeds – an ADAS-equipped vehicle exposes more electronic components and parts to damage at higher repair costs.
Ultimately, improvements in road safety require a more holistic approach that combines technology, education, enforcement, and changes in driving behavior. As speeds increase, the systems can only mitigate speed before impact. Until such a time that these technologies provide 100% driving automation, differences in how drivers respond to this technology will also remain a factor
Modern vehicles incorporate advanced materials like high-strength alloys and composites to reduce weight while maintaining structural integrity. Meanwhile, the standardization of complex electronic systems, like sensors, onboard computers, and sophisticated control modules, has helped to optimize engine performance, fuel efficiency, and safety features.
The pursuit of innovation in vehicle design, production, and functionality, coupled with the demand for greener and more technologically advanced vehicles, has bred greater sophistication, which makes repairing them more complex.
The availability of alternative parts and more opportunities for repair versus replace have also factored into keeping repair costs for older models less expensive. The difference today is the widening cost disparity between the oldest and newest vehicle models, underscoring the dramatic ramp-up in vehicle complexity that has occurred with crash avoidance and connected car technologies.
Vehicle repair costs for older model year vehicles have historically trended lower than those for newer models. (Figure 7)
Figure 7: Average Total Cost of Repairs by Vehicle Age (Non-Comprehensive Repairable Vehicles) – CY 2014 versus CY 2023
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
The cost differential for repairing older versus newer model year vehicles has grown by 35% over the last 10 years. (Figure 8)
Figure 8: Average Total Cost of Repairs (Non-Comprehensive Repairable Vehicles) – CY 2014 to CY 2023 by Vehicle Age
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
In 2014, the average repair cost for the same year vehicle models was nearly 75% higher than the average repair cost for vehicles aged 11 years and older. By 2023, that gap had grown to 101.3% higher for the newest (model year 2023) versus oldest vehicles (model years 2011 and older).
It’s worth noting that the gap was largest in 2020. Supply chain disruptions led to large increases in the cost of replacement parts, and more non-drivable vehicles led to more replacement parts needed per repair. With more parts replaced on average per repair for the newer vehicles, the impact to newer vehicles, as a result, was greater.
For example, the average number of parts replaced for a current model year vehicle in 2014 was 4.5 parts more than for vehicles aged 11 years and older; a difference that grew to 6.5 more parts in 2023 for current model year vehicles versus those of model year 2011 and older. (Figure 9)
Figure 9: Average Number of Parts Replaced per Appraisal (Non-Comprehensive Repairable Vehicles) by Vehicle Age – CY 2014 versus CY 2023
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Labor hours per claim were also higher for newer models, a difference that has grown by nearly 40% over the last 10 years. (Figure 10)
Figure 10: Average Labor Hours per Appraisal (Non-Comprehensive Repairable Vehicles) by Vehicle Age – CY 2014 versus CY 2023
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Automotive claims data skews even newer: the average age of repairable vehicles was 6.7 years in 2023, and 63.4% of repairable vehicles were model year 2016 and newer. Over time, the oldest vehicles will be scrapped, shifting even more of the car parc to the newer and more complex vehicles.
New vehicle design considerations suggest automakers’ production costs will ultimately come down.
For example, the transition from an internal combustion engine (ICE) to a battery-powered electric vehicle (EV) fleet has already driven changes in vehicle design, as manufacturers look for ways to incorporate the battery into the vehicle and transition away from mechanical to electronic components.
Many EVs are built using a “skateboard” design where the battery lays at the bottom of the vehicle, with the remainder of the vehicle attached to the frame (Figure 11). EVs also have fewer systems and parts than ICE vehicles, meaning they should become less complex to produce, maintain, and repair over time.
Figure 11: Anatomy of an Electric Vehicle
SOURCE: FORBES
Additionally, EVs often incorporate more lightweight materials on average than older more traditional ICE vehicles. This difference should disappear over time as automakers look to reduce the weight of their entire fleet and use of these materials becomes more consistent across the industry.
Increased familiarity and better data will allow the repair industry to keep pace with design innovation. With repetition and scale comes efficiency, and as repairer learning curves improve, so too will their confidence, resulting in lower costs and cycle times.
That said, while new vehicle structure and design may make repair easier from a parts perspective, the integration of more sophisticated ADAS features could create new vehicle diagnostic challenges for repairers. As more OEMs (Original Equipment Manufacturers) incorporate Level 3 and 4 ADAS, standardizing proper scans and calibrations will become even more critical to ensure repairs are done to OEM specifications.
The Power of Artificial Intelligence
Escalating complexity will require the repair and claims processes to evolve, and Artificial Intelligence (AI) technologies can play a bigger role in prioritizing high-return activities.
According to the J.D. Power 2023 U.S. Claims Digital Experience Study, there’s tremendous upside in providing a seamless digital experience. Using AI to deliver timely, comprehensive digital updates on the claims and repair process, for example, can deliver high customer satisfaction, yet a third of consumers are still having to follow up with additional questions.
AI can also solve challenges related to vehicle repair, which remains a very hands-on process. A shrinking labor force, higher vehicle complexity and demand for higher skill sets have taken their toll on costs and cycle time. As vehicles become more like computers, technicians can apply AI to vehicle data to better guide the technician and process.
The Power of Earlier, Data-Driven Decision Making
In an era marked by increasing complexity, the impetus to settle claims rapidly has never been more critical. Settling claims as quickly as possible not only improves customer satisfaction but also has tangible financial benefits.
Expedited claims processing reduces administrative costs and helps control expenses associated with prolonged cases, such as rental car fees and storage costs for damaged vehicles. Streamlining the settlement process can also prevent cost overruns due to delays in service or parts procurement.
Other benefits of earlier claims data include the ability to recognize risk exposure earlier, triage and streamline next steps for the claim through workflow automation, and reduce settlement amounts, per CCC data.
It also aids in projecting repair costs more accurately, as the complexity of vehicles often correlates with more specialized – and thus pricier – repair requirements. Shops, in turn, leverage this data to allocate resources effectively, preparing for the uptick in demand for repairs tied to specific technologies.
The strategic use of earlier claims data is a linchpin in the industry's efforts to navigate the complexities of modern vehicles, ensuring both resilience and adaptability in a rapidly evolving market.
The growth in vehicle complexity is redefining risk and repair dynamics across the claims and repair industries. With advanced technologies and intricate systems becoming commonplace, repair processes and costs are being significantly impacted. This complexity introduces new challenges for carriers, shops, and automakers, who must adapt to assess and mitigate risks associated with these intricate vehicle systems.
The industry must also maintain a keen eye on consumer sentiment and regulatory landscapes that continue to evolve. Fostering relationships and dialogues between manufacturers, tech companies, insurers, and policymakers will be vital in crafting a coherent strategy that balances safety, innovation, and affordability.
This collective effort is what will guide the industry through the fog of today's challenges towards a future where progress and practicality align to meet the needs of the entire automotive ecosystem.
According to November’s Insurance Information Institute & Milliman forecast, the Property Casualty insurance industry is expected to end 2023 with a net combined operating ratio (NCOR) of 103.9%, marking a second consecutive year of profitability challenges driven mostly by weather-related property losses, personal and commercial auto, and the slow pace of taking additional rate needed to offset losses. (Figure 1)
APD Figure 1: P&C Industry Net Combined Operating Ratio (2017-2025)
SOURCE: INSURANCE INFORMATION INSTITUTE & MILLIMAN (JANUARY 2024)
2024 is expected to see continued profitability headwinds. Fortunately, 2023 was devoid of a region-decimating hurricane, such as Ian (2022), Irma, Maria, and Harvey (2017), Sandy (2012), Katrina (2005), or Andrew (1992). However, severe convective storm activity – including thunderstorms with lightning, tornadoes, hail, and straight-line winds – has become a constant catalyst for losses.
In 2023, severe convective storms in the U.S. accounted for $58 billion in insured losses (49.2% of global insured losses). Aon, Gallagher Re, and Swiss Re attribute increased severe convective storm losses to factors such as increased exposure, damageability, urbanization, and rising populations, as opposed to an increased storm frequency. The Central Plains and Midwest are noted as especially prone to severe convective storms. Areas of high hail risk, including Austin, Dallas-Fort Worth, and Denver have all experienced >12% housing unit growth between 2010-2020.
Claims processed through CCC affirm the increased hail activity in the Central Plains and Midwest. Hail claims accounted for 12.0% of all comprehensive vehicle claims in 2023, up from 6.8% in 2022. (Figure 2)
APD Figure 2: CCC National Industry Hail Percentage Contribution to 2023 Comprehensive Claims
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
6.8% of hail claims were flagged total losses in 2023 (a 0.9%-point increase from 2022). The aggregate total cost of repairs for repairable hail claims estimated through CCC is over $2.3 billion for 2023.
Vehicle Sales & Vehicles in Operation
Reduced new vehicle availability (at the onset of the pandemic due to parts/semiconductor availability, manufacturing limitations, etc.), new vehicle prices, financing costs, and general economic woes have resulted in an overall decline in new vehicle sales since March 2020. Potentially 10 million (or more) new vehicles were not sold over the past four years - 10 million of the most sophisticated automobiles ever produced.
According to Experian, 288.5 million total vehicles were in operation through Q3 2023. This is an increase of 3.6 million vehicles compared to Q3 2022. Experian also reported that 11.3 million vehicles were taken out of operation as of Q3 2023, a million less vehicles than the prior year and 2.6 million less than what was reported in Q3 2021. According to S&P Mobility, the average U.S. vehicle age was 12.5 years, reinforcing the trend toward a more mature U.S. vehicle pool.
Auto Loan Trends
In December, the average Annual Percentage Rate (APR) was 7.1% for new vehicles and 11.4% for used. Both new and used APRs have reached points during 2023 not seen since the Great Recession: New-vehicle APR last hit 7.5% in Q2 2007 and used-vehicle APR is the highest since Q4 2007 when it climbed to 11.4%. 17.9% of new auto loans have a monthly payment of $1,000 or more. In the prior quarter, 64.5% of buyers with $1,000 payments are in 67- to 84-month terms and only 15.6% of buyers took out 31- to 48-month loans on their new vehicles. (Figure 3)
APD Figure 3: 12 Months – Moving Total New Vehicle Sales (Not Seasonally Adjusted)
SOURCE: FEDERAL RESERVE BANK OF ST. LOUIS
As of Q4 2023, auto loans accounted for 9.2% of total household debt (the quarterly average has been 9.3% since 2016). Total auto loan debt in the U.S. is over $1.6 trillion – a 50% increase since Q1 of 2016. Total household debt has increased by 42.9% during that same time period.
According to the New York Federal Reserve Bank, 2.66% of auto loans became 90+ days delinquent in Q4 2023, up from 2.22% in Q4 2022. Though high, delinquency rates are below those of the financial crisis era, where rates were as high as 3.48% (Q2 2009).
As auto loans continue to increase in cost and length, more people could be potentially upside down in the case of a total loss.
Paid Claims Frequency Trends
According to FastTrack’s paid claim frequency trends, through the first half of 2023 auto collision frequency has flattened out over the five previous quarters reported. Liability claims frequency has also flattened out over recent quarters and remains well below historic norms. (Figures 4)
APD Figure 4: Paid Claim Frequency Trends
SOURCE: TOP INDEPENDENT STATISTICAL SERVICE (ISS) FASTTRACK | BOTTOM U.S. DEPARTMENT OF TRANSPORTATION FEDERAL HIGHWAY ADMINISTRATION
Comprehensive paid claim frequency has continued to rise in recent quarters and appears to be at or near historic levels, likely a result of the storm activity.
Miles driven are +2.1% YoY through December and, for the year, 2023 total miles driven is up (only slightly) compared to 2019 (pre-pandemic). However, dangerous driving behaviors – speeding, distracted driving, running red lights, and driving under the influence – continue to plague America’s roadways.
Increasing inflationary pressures have meant higher costs for insurers who have raised rates to combat major hits to their profitability, and to account for the rising costs of insuring and repairing vehicles as previously discussed. The December consumer price index for motor vehicle insurance is +20.3% YoY and +36.2% compared to 2019. Inflation for all items has increased by 35.3% since January of 2012; motor vehicle insurance has increased by 97% over that same period. (Figure 5)
APD Figure 5: Consumer Price Index: U.S. City Average, All Urban, 12-Month Percent Change, Not Seasonally Adjusted
SOURCE: U.S. BUREAU OF LABOR STATISTICS
The Insurance Research Council reported that 14% of drivers are uninsured and J.D. Power reported that 5.7% of American households with at least one vehicle do not have insurance. (Figure 6) Factoring in the aging car parc, consumers with older vehicles could be more prone to increasing deductibles or dropping first party coverages, decreasing policy limits, or electing to go without insurance altogether.
APD Figure 6: Percentage of Uninsured Motorists (2017-2022)
SOURCE: INSURANCE RESEARCH COUNCIL
Used Vehicle Pricing Volatility
Between March and June 2021, the Consumer Price Index (CPI) for used cars and trucks jumped by 29.2%, because of low inventories and high demand; inflation for that period was only 2.6%.
New vehicle prices, which averaged around $40,000 at the beginning of 2021, increased steadily until peaking at $49,507 in December 2022. Though decreasing slightly over the past year, new vehicle prices have, for the most part, remained in the $47,000-$48,500 range.
Used vehicles began 2021 at an average list price of $21,572; by December ‘21, the average list price was $28,205 – a 30.7% increase. Since then, prices have decreased overall despite periodic volatility in the used vehicle market. In November of 2023, the average used vehicle price fell below $26,000 for the first time since August of 2021.
Used vehicle indexes tell an interesting tale. (Figure 7) Through December, the consumer price index for used cars and trucks is -1.3% YoY. The CPI, which reflects retail pricing for used vehicles, fluctuated between 185.857 in January, to 184.997 in March, then jumped the next three months, reaching 202.07 in June. December’s CPI was 186.383 or 0.3% higher than January.
APD Figure 7: Used Vehicles Retention Index, Values, and Consumer Price Index
SOURCE: BLACK BOOK (RETENTION INDEX), MANHEIM WHOLESALE (VALUE), AND U.S. BUREAU OF LABOR STATISTICS (CPI)
Wholesale indexes, which generally serve as leading indicators for retail pricing, reflect similar value shifts throughout the year, and appear to be telegraphing continued used vehicle price decreases. The Manheim Used Vehicle Value Index finished December 2023 at 204.0 – the lowest value since March 2021 when the index was 195.4. The Manheim Index is -9.3% compared to January.
Total Loss Frequency
CCC data indicates a 1.5%-point increase in vehicles flagged total loss in 2023, primarily due to the erosion of used vehicle values and an increasingly mature vehicle pool, as ~70% of valuations are for vehicles 7 years or older. (Figures 8 and 9) An increased total loss frequency will, conversely, decrease the ratio of repairable vehicles. Higher physical damage severity losses, which might have been repaired a year ago, are more likely now to be totaled, increasing shop capacity and lowering overall cycle times.
APD Figure 8: CCC National Industry Total Loss Share of Claim Count (CY 2013-2023)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
APD Figure 9: CCC National Industry Total Loss Share of Claim Count (CY 2016-2023)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
While these appear to be promising signs for consumers, used vehicle price volatility is not without its pitfalls in the current economic conditions. As used vehicle prices continue to decrease, the possibility of consumers being underwater due to unfavorable loan terms increases. Transunion reported in June that Q1 2023 used vehicle loan-to-value (LTV) ratios averaged 125%, up from 110% in Q1 2022, 104% in Q1 2021, and 112% in 2020. (New vehicle LTVs were 104% in Q1 2023, down from 105% in 2022).
Between 2020 and 2022, the average adjusted vehicle value increased by almost 49%, from $10,184 to $15,134, according to CCC’s total loss valuation data. 2023 has seen an overall decrease of 4.4% YoY, with an average adjusted vehicle value of $14,472. (Figure 10)
APD Figure 10: Total Loss Values & Mix
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
As vehicle values decrease, segments of ancillary coverages, such as GAP (guaranteed asset protection) coverage, could be required to cover larger payouts than anticipated. Understanding how asset values are shifting could be an additional step product, pricing, and underwriting departments could undertake to ensure pricing adequacy amidst market fluctuations.
Vehicle Theft
According to NICB, ~500,000 vehicles were reported stolen in the first half of 2023 (+2% vs. Q1 2022). States with the largest YOY increases include:
This is on the heels of 1,001,967 auto thefts in 2022, the most since 1.05 million in 2008 and a 7% YoY increase. NICB has also reported that full-size pickups represent 25% of all vehicles stolen. (Figure 11)
APD Figure 11: CCC National Industry Thefts as Percent of Total Loss Valuation Counts (CY 2016-2023, by Quarter)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Domestic pickups are desired because of their values (or retention of value), the value of their parts, and in some cases, older trucks are not equipped with immobilizers, which can help to prevent thefts from occurring.
As we begin another new year, there are signs of improvement in collision repair following the apex of prolonged cycle times and elevated costs that bled into 2023 after an especially challenging Q4 2022.
In 2023, the average total cost of repair (TCOR) has increased by 6.5%. After two straight years of double-digit increases (Figure 1), this smaller percentage increase may indicate that TCORs are beginning to fall back in line with historic inflationary trends.
Repair Figure 1: CCC National Industry, Average Total Cost of Repairs - All Loss Categories Repairable Appraisal Statistics
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Parts Costs
Following years of 7.3% and 5.4% increases in average parts costs, the average price per part increased a modest 0.3% in 2023. (Figure 2)
Repair Figure 2: National Industry Repairable Appraisals - Average Cost per Part (all parts, including attachments across all part types)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
The average number of parts per appraisal appears to be flattening after consecutive years of large increases. The average went from 11.2 parts per appraisal in 2020, to 12.2 in 2021, and 13.2 in 2022. 2023 is on track to end at or below 13.5. (Figure 3)
Repair Figure 3: CCC National Industry Non-Comprehensive Repairable Appraisals - Average Number of Parts Replaced per Claim
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Labor Costs
Total repair costs jumped double-digits in 2021 and 2022. When indexed against 2018, parts contributed almost 50% of the increased repair costs. For 2023, this same contribution analysis reveals that parts account for a smaller share (43.8%) of the increase, while non-paint labor accounts for the largest contribution increase. (Figure 4)
Repair Figure 4: Average TCOR Change vs 2018 – Contribution by Type (2019-2023, Collision & Liability)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
The outlier driving overall repair cost increases in 2023 was labor rates, which were up 7.4% for the year and came on the heels of a 7% increase in 2022. (Figure 5)
Repair Figure 5: CCC National Industry Average Labor Rates per Labor Category CY2018-CY2023
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
The average number of labor hours per appraisal is flat YoY at 27.4, also following back-to-back years of large jumps. (Figure 6)
Figure 6: National Industry Non-Comprehensive Repairable Appraisals - Average Number of Labor Hours per Claim
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
What’s notable here is this labor rate increase took place in 2022 and 2023, whereas the number of labor hours, parts volume, and parts prices saw their largest increases In the two years prior – in 2021 and 2022.
Mean labor rates from estimates are lagging 9 months behind general inflation - the consumer price index for all items. YoY labor rate increases peaked in February of 2023 as opposed to general inflation, which reached its apex in June of 2022. (Figure 7)
Repair Figure 7: Labor Rates vs Consumer Price Index Inflationary Trends Comparison (YOY % Change by Month)
SOURCE: CCC INTELLIGENT SOLUTIONS INC., U.S. BUREAU OF LABOR STATISTICS
As inflation began to level out entering Q4 of 2023, prior trends indicate that we could see labor rate increases flatten toward the end of Q2 2024.
Productivity and Cycle Times
Cycle times – including time between appraisal completion and vehicles going into the shop, and repair time – are slowly improving, though both productivity and cycle times still lag pre-pandemic levels. (Figure 8)
Repair Figure 8: CCC National Industry DRP Repairs - Quarterly Cycle Times Comparison
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
The average time for vehicles to go into a shop for repairs following estimate completion remains over 60% longer, with non-drivable vehicles requiring over 18 days and drivable vehicles almost 28 days. (Figure 9)
Repair Figure 9: CCC National Industry DRP Repairs Estimate Sent to Vehicle In Days Average by Driveable Flag
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
This is reflected in Crash Network’s U.S. National Collision Repair Scheduling Backlog, which has shown improvement from 5.8 weeks in Q1 of 2023 to 4.1 weeks in Q4. (Figure 10)
Repair Figure 10: U.S. National Collision Repair Scheduling Backlog in Weeks
SOURCE: CRASH NETWORK
Additionally, shop productivity – measured in labor hours per repair day – is hovering at 1.8 hours for non-drivable vehicles and 2.3 hours for drivable vehicles. These are only slight improvements as productivity markedly decreased in 2020 and 2021. As compared to pre-pandemic productivity levels, cycle times for labor requires an average of four additional days for drivable vehicles and eight days for non-drivable vehicles. (Figure 11)
Repair Figure 11: DRP Repairs Comparison
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Shop capacity, parts availability, carrier approvals, and technician availability could all be factoring into these delays, which can prove costly for insurance carriers and customers in additional rental expense and for shops in limiting overall repair volume.
Brief History of EVs
By most standards, EVs are amid an incredible growth spurt - from less than 50,000 new EVs sold in 2013 to almost 1.2 million in 2023. Battery EVs represented less than 1% of new vehicle sales in the U.S. between 2013 and 2017. Sales doubled between 2017 and 2018, though EVs still represented less than 2% of new vehicle sales between 2018-2020. EV sales nearly doubled again between 2020 and 2021, then jumped another 60% in 2022. The meteoric rise of a new vehicle platform is more relatable to what we’ve experienced in technology as opposed to the auto industry.
Given the rapid acceleration of EV sales, they now represent 1.9% of repairable appraisals, according to CCC’s estimating data for 2023. (Figure 12)
Repair Figure 12: Electric Vehicle (EV) and Non-EV CCC National Industry Estimate Volume (2018-2023)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
The EV car parc remains relatively young in comparison to the mature U.S. vehicle pool. The average vehicle age of a repairable EV is 2.1 years, while the average non-EV is 6.8 years old. 78.5% of repairable EV estimates are for vehicles 3 years old or newer; 44% of repairable non-EVs are 7 years or older. (Figure 13)
Repair Figure 13: EV and Non-EV Vehicle Age and TCOR
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
EV Repair Costs
As EVs strive toward price parity in the new car market – as of December EVs cost ~$4,850 (or +10%) more than the average new vehicle – the average repair difference between EVs and non-EVs remains around 50%. This gap shrinks when looking at newer vehicles and should continue to narrow as more models enter the EV market.
4- to 6-year-old EVs cost 29.3% more to repair than their non-electric counterparts. The gap decreases slightly for 1-3-year-old vehicles with EVs costing 23.6% more to repair. And, for current year or newer vehicles, the gap narrows to 16.8%.
Appraisal Parts and Labor
Labor represents the largest contribution to the difference between EV and Non-EV repair costs for vehicles 3 years old or newer. Labor accounts for 45.5% of total repair costs In EVs 3 years or newer and 35.9% for non-EVs. Parts are almost the exact opposite – 36.3% for EVs and 43.6% for non-EVs.
In 2023, non-EVs 3 years or newer averaged 29.7 hours per appraisal, while EVs from the same model years required 35.7. (Figure 14)
Repair Figure 14: CCC National Industry EV vs Non-EV: 3 Years Old or Newer (2023)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
On average, labor costs were 55.2% higher per estimated repair on EVs. Parts costs per estimate were only 1.7% higher for EVs within these vehicle segments. (Figure 15)
Repair Figure 15: CCC National Industry EV vs Non-EV Common Part Groups Comparison (2023) – Less Attachments
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Cycle Times
In 2023, the average time between last estimate and vehicle out was nearly 50 days, over 10 days more than non-EVs. Getting the vehicle into the shop added almost six full days and repairs required an additional 4.4 days. (Figure 16)
Repair Figure 16: CCC National Industry DRP Repairs Cycle Time Comparison (2023)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Capacity within the burgeoning network of certified EV shops appears to be the basis for longer cycle times, as well as the meticulous nature of procedures required to complete repairs.
Valuation Trends
A comparison of the percentage of vehicles flagged total loss by age for EVs and non-EVs indicates that EVs are being totaled less than their non-EV counterparts.
In taking a closer look at more recent model years, EVs are flagged total losses 1.5% less for current year or newer vehicles, 2.3% less for vehicles 1-3 years old and 4.2% less for vehicles 4-6 years old. (Figure 17)
Repair Figure 17: CCC National Industry EV vs. Non-EV Repairable Vehicle Age Comparison (2023)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Overall, only 8% of EV estimates are flagged total loss, while 20% of non-EVs are flagged total. As the data indicate, non-EVs flagged total skew older. Almost 70% of all vehicles flagged total are 7 years or older. Older non-EVs were flagged on almost 30% of all appraisals for the 7 years or older segment. (Figure 18)
Repair Figure 18: CCC National Industry EV vs. Non-EV % of Claims Flagged Total Loss by Vehicle Age
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
The prevailing theme for casualty in 2023 has been a crystallization of “new normal” post-pandemic injury and treatment trends, which are primarily focused on two areas: Impact severity - indicators that remain elevated due to a persistence of risky driving behaviors, including speeding and distracted driving despite improvements in vehicle safety technology for newer vehicles, and emerging treatment patterns for those losses involving injury claims.
The average 3rd party treatment duration and procedure count has been decreasing since post-pandemic peaks in 2021. While this sounds positive on the surface, the reality is that severity continues to climb at a rate outpacing general inflation. This is due in part to significant cost increases for medical bills, the largest for already high-dollar procedures such as radiology, surgery, and evaluation and management.
There has also been a faster movement to more interventional diagnostics and treatments in the form of Outpatient Surgery and Radiology, as opposed to conservative physical therapy or chiropractic treatment. An increase in head injury diagnoses has contributed to higher frequencies of radiology procedures such as CT scans and MRIs, compounding the impact of cost increases. The medical provider industry, specifically hospitals and health systems, recovered marginally from their own significant profitability challenges of the last 1-2 years, although many continue to struggle, contributing to access/availability issues, especially in rural pockets of the country.
The most notable new development this year has been the downstream impacts of unusually high auto premium increases (up 20.3% from Dec ‘22 to December ‘23), some of which we are already seeing (reduced customer satisfaction scores, increased policy shopping, reduced coverage), and some we are just beginning to understand.
From within our data, we have observed significant increases in the number of uninsured or underinsured motorist injury claim submissions, as well as the percentage of PIP and Med pay claims exhausting benefits.
Impact Severity
CCC data shows that impact severity remains elevated at 7.1 mph, well above pre-pandemic baseline levels despite improvements in vehicle safety and crash avoidance technology for newer vehicles. (Figure 1)
Casualty Figure 1: Average Delta-v by Claim Create Date | Collision and Liability Claims (2021-2023)
SOURCE: CCC INTELLIGENT SOLUTIONS INC. UPDATED THROUGH Q4 2023
This is in line with external findings of similarly elevated rates of fatalities as well as persistent risky driving habits across the U.S., including speeding and distraction.
Average Delta-v is highest in Kentucky, Tennessee, and Rhode Island. The national average is 7.1 mph. (Figure 2)
Casualty Figure 2: Average Delta-v by U.S. State (Through Q4, 2023)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Claims Frequency
The average amount paid out on 3rd party bodily injury claim has also been steadily increasing (currently $25K). While the increases have slowed in the last year (2.2% increase since Q2 2022), the cumulative increase over the last 4 years has been significant at a 35% increase since Q2 2019. (Figure 3)
Casualty Figure 3: 3rd Party Casualty: Avg $ Paid Per IP by Quarter | Personal Auto PIP
SOURCE: ISS FAST TRACK
Paid bodily injury claim counts have been rising since early 2021, while the remaining 15% are below the pre-pandemic baseline. (Figure 4)
Casualty Figure 4: 3rd Party Casualty: Paid Claim Count by Quarter | Personal Auto Bodily Injury
SOURCE: ISS FAST TRACK
Medical Billing Severity
3rd party bill line severity has increased 6.7% since 2022, with the steepest increases occurring in H2 of 2023 (+8.3% from Q4 2022 to Q4 2023). (Figure 5)
Casualty Figure 5: 3rd Party Casualty: Average Med Bill $ per Bill Line Excluding Duplicates
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
The largest severity increases in key volume states over the last year have occurred in Pennsylvania, Colorado, and Illinois. (Figure 6)
Casualty Figure 6: Key States Average Med Bill $ Submitted per Bill Line % Change 2022 vs 2023
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Procedures
The distribution of 3rd party procedure dollars showed notable increases in Radiology and Evaluation & Management in 2023. (Figure 7)
Casualty Figure 7: 3rd Party Casualty: Procedure Category | % of Total Med Bill $ Submitted
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
As we drill down further into the Radiology and E&M gains, cost severity increases occurred on nearly all procedure subcategories, with bill frequency increases also occurring on CT Scans, MRIs, and High-Level E&M. (Figure 8)
Casualty Figure 8: 3rd Party Casualty: Procedures | Frequency and Avg Med Bill $ Per Line 2022 vs 2023
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
CT Scans
The average charge for a single CT Scan procedure has increased 43% since 2019, with some increases at the state level even higher, while the average number of unique CT scans per injured party has increased 9% over the same period. (Figures 9 and 10)
Casualty Figure 9: 3rd Party Casualty: CT Scans | Avg $ Billed per Line Less Dups and Avg Unique Procedures per IP by Service Date
SOURCE: CCC INTELLIGENT SOLUTIONS INC. UPDATED THROUGH DECEMBER 2023
Casualty Figure 10: 3rd Party Casualty: CT Scans | % Change in Avg $ Billed Per Line Less Dupes 2019 vs 2023
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Diagnosis
Notable increases in primary diagnoses of head injury over the last 2 years, primarily driven by increases in minor severity diagnoses such as headache, as opposed to increases in more serious head injury diagnoses such as traumatic brain injury (TBI). (Figure 11)
Casualty Figure 11: 3rd Party Casualty: Primary Diagnosis Categories | % of all Bills (Count)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Treatment
Average treatment duration and procedure counts per injured party have continued to decrease since post-pandemic peaks, with both now slightly below pre-pandemic baselines. (Figure 12)
Casualty Figure 12: 3rd Party Casualty: Avg Treatment (days) and Avg Procedures (count) per Injured Party, Excludes Treatment > 1,000 Days
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
The average time between date of loss and treatment has decreased for all outpatient surgery and diagnostic procedures compared to pre-pandemic, with notable cost increases on those same procedures. (Figure 13)
Casualty Figure 13: 3rd Party Casualty: Avg DOL to Service Date (days) & Avg $ Billed Per Line | Service Dates 2019 vs 2023
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Drilling further into outpatient surgery procedures by patient age, the largest number occurred for patients aged 41-50. Also of note, significant numbers observed for patients as young as 21-30. (Figure 14)
Casualty Figure 14: 3rd Party Casualty: Outpatient Surgery Units by Patient Age | Service Dates 2022 - Present
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Over the last 5-7 years, we observed emergence and rapid growth of Platelet-Rich Plasma (PRP) treatments. (Figure 15)
Casualty Figure 15: 3rd Party Casualty: Platelet Rich Plasma Injections (0232T) | Avg Med Bill $ Submitted and Unit Count
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
PRP therapy is a form of regenerative medicine that harnesses and amplifies the natural growth factors found in human blood cells to help heal damaged tissue.
PRP has risen to the 6th-highest surgical procedure by cost severity in 2023, a 500% increase since 2019. 90% of units billed since 2022 have been in California, Georgia, Florida, and Texas. (Figure 16)
Casualty Figure 16: 3rd Party Casualty: Platelet Rich Plasma Injections (0232T) | % of All Units Billed (2022– Present)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Uninsured Motorists
As noted recently by JD Power, the number of uninsured motorists (UM) in the U.S. is increasing. CCC observed similar increases in the percentage of 3rd party claims submitted for injuries caused by an uninsured or underinsured motorist (UIM) (+28% since 2019, +40% since 2021). (Figure 17)
Casualty Figure 17: 3rd Party Casualty: Percentage of 3rd Party Features Submitted as UM/UIM
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Claims Frequency
1st Party Personal Injury Protection (PIP) claim frequency has decreased since Q1 2022, which represented high water mark of post-pandemic recovery. (Figure 18)
Casualty Figure 18: 1st Party Casualty: Paid Claim Count by Quarter | Personal Auto PIP
SOURCE: ISS FAST TRACK
PIP 1st Party claim severity per injured party has increased 9% from the first half of 2022 to the first half of 2023. (Figure 19)
Casualty Figure 19: 1st Party Casualty: Avg $ Paid Per IP by Quarter | Personal Auto PIP
SOURCE: ISS FAST TRACK
1st Party claim severity increases at the injured party level over the last 4 years have been minimal, due in part to policy limit constraints and regulatory changes.
Medical Billing Severity
1st party bill line severity has increased 5.1% since 2022, and 12.3% since 2020. (Figure 20)
Casualty Figure 20: 1st Party Casualty: Avg Billed Per Line Less Dupes by Client Received Date (Excludes Bills > $250K
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
For key volume states, the most notable line level increases have occurred in Georgia and Pennsylvania. (Figure 21)
Casualty Figure 21: 1st Party Casualty: Key States | % Change in Avg Billed 2022 vs 2023
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Casualty Figure 22: 1st Party Casualty: Procedure Categories | % of $ Billed by Client Received Date
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Drilling further into Surgical and Evaluation & Management growth in 1st Party casualty claims, movement is driven by both cost and frequency increases within most procedure subcategories. (Figure 23)
Casualty Figure 23: 1st Party Casualty: Procedures | Frequency and Avg $ Billed 2022 vs 2023
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Exhausted Benefits
As bill line severity increases, a growing percentage of 1st Party PIP and Medpay claims are reaching policy limit threshold (+30% over the last 4 years) (Figure 24), which could suggest that typical 1st Party policy limits are increasingly inadequate to cover the full extent of charges than in the past.
Casualty Figure 24: 1st Party Casualty: Percentage of Closed Features with Exhausted Benefits
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Carriers are seeking ways to operate more efficiently through centralization of subrogation operations, driving consistency and scale of workflows, adjusting the balance between onshore and offshore resources, and better usage of technology and analytics advancements which have become more readily available.
Carrier’s current state of over 100%+ combined ratio means that executives are looking at every revenue-generation and cost reduction opportunity to improve their overall results. Subrogation is the only aspect of the claims organization that can influence both sides of the ledger, but teams are often hamstrung by turnover.
Some carriers have reported that over 50% of their 1st party adjusters have less than 2 years’ experience. StaffBoom reports insurance average turnover is now 12-15% from a historical 8-9%, and voluntary turnover is spiking, exacerbating the problem. Some carriers report up to a 16% decrease in subrogation referrals as the 1st party adjusters require more training and have larger caseloads. Many carriers have struggled with comparative negligence identification in past years, compound that with the lack of real experience in APD, and now that problem has become even more pronounced.
High turnover and lack of experienced staff is further exacerbated by natural disasters and/or lagging rate increases in some jurisdictions, which have caused carriers to either slow down or completely stop writing new business. This will ultimately have a downstream impact on both claims and subrogation. Carriers filling these gaps may see claims and subrogation increases.
Auto carriers are also beginning to challenge their current underwriting strategies, realizing that current models are dated and are not performing to today’s profitability standards. Carriers are working hard to price risk appropriately and be more selective in the risks they write. Being more selective on risks should translate to fewer losses, but more subrogation opportunities.
Auto Recovery
The average claim amount continues to escalate with the impact of higher speed/severity crashes, less parking lot/low speed incidents, increasing vehicle repair/labor costs, and the addition of a larger volume of EVs. Likewise, average auto recovery has increased slightly as one would expect with the claims amount increasing. (Figure 1)
Subrogation Figure 1: Subrogation Trends 2020-2022
SOURCE: AM BEST
Auto recoveries have dipped post-COVID with more single-vehicle collisions and less parking lot incidents. Carriers receiving the demands are aggressively auditing them, resulting in about a 90-91% recovery rate per average auto demand. Carriers that have leveraged third-party administrators (TPAs) for missed opportunity reviews have improved their overall processes to the point where they likely miss less than 3% of potential auto recovery dollars. (Figure 2)
Subrogation Figure 2: CCC Subrogation Aggregate Data, 2023
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Technology Growing Pains
Carriers are still stuck with multiple systems from which they pull information, which makes it difficult to automate the aggregation of necessary information. At the same time, the shift toward modernizing carrier claims management systems has placed increased pressure on subrogation departments to improve their recovery cycles.
Additionally, most carriers are not directly integrated with negotiation platforms – nor are their service providers – which creates dual-screen complexity and gaps in reporting. There also appears to be very little “verbal negotiation” going on between carriers, as most negotiation is conducted via technology platforms, resulting in increased arbitration filings.
Manual Processes
Inbound subrogation cycle times vary greatly for carriers, from a high of 70-90 days to a low of <30 days. On average, 1 in 4 subrogation demands has some sort of “data error,” creating extra work on the part of the inbound carrier, which has led to carrier frustration.
Most carriers are frustrated with their inability to consistently apply contributory negligence where appropriate (potential resultant savings is 8-12% per average demand).
Disputes involving material damage and/or advance charges can result in an additional savings of 10-22% per average demand. (Figure 3)
Subrogation Figure 3: CCC Subrogation Aggregate Data, 2023
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
These challenges represent a lack of complete visibility into a carrier’s inbound indemnity spend, as they struggle to reconcile original demand amount versus pre-arbitration negotiation results versus post-arbitration decision.
Aftermarket Parts
As vehicle complexity increases, so do parts replacements. The national average for the percent of claims with aftermarket parts usage is 57%, with most states averaging between 50-60%.
There will continue to be heavy scrutiny around parts usage in vehicle repairs. Given the average number of parts replaced per claim continues to increase by .3 to 1 part per year, this will continue to be an area where carriers seek to limit indemnity exposure, especially for those adverse carriers receiving a subrogation demand from a 1st party carrier.
Understanding regional trends in aftermarket parts usage is important for effective subrogation audit strategies.
