This Q2 2024 edition of Crash Course focuses on extreme weather events, especially hurricanes and severe convective storms, and their considerable impact on the auto insurance and collision repair industries. To help the industry navigate the 2024 hurricane season, CCC industry analysts and experts provide exclusive insights based on CCC’s aggregated historical claims and repair data, while also evaluating geographical and migration trends as well as non-peak perils, such as hail. These insights enable carriers and repairers to validate their current strategies, make informed adjustments, and enhance their preparedness for severe weather events ahead.
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Weather has become more unpredictable in recent years, affecting a much larger geographical footprint than it has historically. Preparing for these events can be as nuanced as the events themselves.
Carriers and repair shops usually plan months, sometimes years in advance in anticipation of these events, analyzing historical storm data and predictive models to forecast potential impacts. Based on these insights, carriers may adjust underwriting guidelines and secure reinsurance, while repair facilities may collaborate with suppliers to ensure a steady supply of parts to minimize repair delays and staff up to manage the increased volume.
So, what can the industry learn from aggregated historical claims data from CCC, which processes more than 18 million claims annually, and more than a trillion dollars of historical accident data on hand? As it turns out, plenty.
Initial forecasts from Colorado State University, a trusted source for accurate and reliable forecasts since 1984, predict 11 hurricanes this year, with 5 categorized as major hurricanes. (Figure 1) Comparatively, this represents a significant spike from 2023 and hints at challenges reminiscent of the tumultuous 2021 season.
Figure 1: Atlantic Basin Seasonal Hurricane April Forecasts (2020-2024)
SOURCE: COLORADO STATE UNIVERSITY
The National Centers for Environmental Information (NCEI) found that the number of storms causing $1 billion or more in damage has increased significantly over the last 40 years. As of February 2024, the NCEI reports there were 28 such events recorded in 2023, compared to 18 the year before. (Figure 2)
Figure 2: Insurance Industry Losses in $B vs. Total Number of Loss Events (2023)
SOURCE: REINSURANCE NEWS
Beyond the obvious financial losses, these severe weather events can potentially overwhelm the operational capacities of state or regional property and casualty claims teams, auto repairers, salvage and tow providers, rental companies, and more.
(Florida, Georgia, South Carolina – 2022)
To grasp the true impact of a hurricane, look no further than 2022's Hurricane Ian. CCC's monthly comprehensive estimate volumes were relatively consistent and predictable – at least until the hurricane made landfall in Florida, Georgia, and South Carolina in late September. Comprehensive estimates jumped 3X for the three states and almost 7X for Florida, alone. (Figures 3 and 4)
Figure 3: Hurricane Ian 2022 Indexed Comprehensive Claims Volume (Florida, Georgia, South Carolina)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Figure 4: Hurricane Ian 2022 Indexed Comprehensive Claims Volume (Florida ONLY)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
With the mass influx of claims comes the immediate need to effectively triage, assign, appraise, and move vehicles. One of the most noticeable shifts is in who performs the initial appraisal. Because of the higher proportion of potential total losses and sheer volume of inspections that need to be completed, carriers increase their reliance upon staff appraisers – many of whom are part of a catastrophe team – and independent appraisers (IAs).
Prior to the hurricane, IAs handled ~8% of appraisals, DRP shops ~21%, and staff appraisers ~58%; for appraisals around the time of the Ian, DRP appraisal contribution decreased to 6%, while IAs increased by over 10% to 18.5%, and staff appraisers increased to almost 65% of all appraisals. (Figure 5)
Figure 5: Florida Appraisals by Appraiser Type – Hurricane Ian and Surrounding Loss Dates 2022
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
After Hurricane Ian, there was a significant increase in the time it took for vehicles needing repairs to actually start the repair process after initial claims were assigned to a shop. (Figure 6)
Figure 6: Hurricane Ian 2022 | Average # of Days From First Assignment to Vehicle In
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
This clear spike indicates a delay or bottleneck in the repair process, which could be due to various factors such as increased demand for repairs, limited shop capacity, supply chain issues, or resource shortages in the aftermath of the hurricane. Additionally, shops in affected areas may have also been impacted by the storm, contributing to even more demand among fewer shops.
Perhaps more important is the continued downstream impact catastrophic events have in the months following on turnaround times for unrelated and other future claims as the ecosystem works through the backlog of vehicles.
A spike in claims creates a spike in the need for replacement parts. Following Hurricane Ian, Florida, Georgia, and South Carolina saw exponential increases in demand for parts within numerous parts groups, including liftgates, trunk lids, rear lamps, quarter panels, rear bumpers and doors. (Figure 7)
Figure 7: Indexed Part Count | Demand Following Hurricane Ian in Florida, Georgia, South Carolina (2022)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
In Florida, which bore the brunt of Hurricane Ian-related damages, part demand increased almost 20X for trunk lids and liftgates, with many of the same parts mentioned above experiencing demand increases in excess of 10X. (Figure 8)
Figure 8: Indexed Part Count | Demand Following Hurricane Ian in Florida ONLY (2022)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
The severity of weather-related damages can also lead to an increase in the number of vehicles being declared total losses by insurance carriers, which can create assessment backlogs for shops and replacement vehicle shortages for insurers.
CCC data shows that during Hurricane Ian’s peak impact days (September 25-30, 2022), the percentage of total loss vehicle claims spiked, whereby nearly 52% were declared total losses for all three states, and 50.5% were declared total losses in Florida, alone. (Figures 9 and 10)
Figure 9: Hurricane Ian 2022 | Repairable vs. Total Loss % of Auto Claims
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Figure 10: Repairable vs. Total Loss % of Auto Claims | Hurricane Ian 2022 (Florida Only)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
This is a stark contrast to the days leading up to the hurricane (September 20-24), where the percentage of total loss claims hovered between ~16%-18%. After the hurricane subsided (October 1-5), the percentage of total loss claims decreased to more typical levels, around 20%.
Commercial and recreational vehicles (CRVs) also saw an influx of total losses following Hurricane Ian. In Florida, CRV valuation volume jumped across virtually all categories, especially for marine (boats) of various sizes, heavy equipment, all-terrain vehicles, travel trailers, and motor homes. (Figure 11)
Figure 11: Florida CRV Valuations by Type | September 2022 Volume Relative to All Other Months Average
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
The specialized nature across many of these CRV categories adds to the expertise, time, and cost needed to appropriately evaluate these claims. Also contributing to CRV complexity is the widely varying costs and mobility associated with these units, which can impact both risk and repair/replacement costs.
Total loss claims often necessitate coordination with salvage, towing, and rental services. As such, post-storm salvage operations become critical as insurers and salvage companies must efficiently process a higher volume of totaled vehicles. This not only includes determining the value and condition of these vehicles but also coordinating their removal and sale, which can be a logistical challenge during periods of widespread disaster recovery.
* Learn more about CCC Valuation Solutions here.
While hurricanes often dominate the headlines, it's the less dramatic but more frequent disasters that can have a substantial impact on the auto claims and repair industries. These types of disasters, such as hail, accounted for more than half of global insured natural catastrophe losses over the last six years, illustrating how seemingly minor incidents can have major influence on insurers' bottom lines.
Hailstorms, which are commonplace in the Midwest and Central Plains regions, can result in tens of millions of dollars in damage, but because they don't generate billions of dollars in losses in a single event, they may not meet reinsurance thresholds, which means these small but frequent claims payouts can quickly add up for insurers that write policies in hailstorm-prone regions.
High winds and heavy rains both play their parts in severe storm damage, but hail is the biggest single component, accounting for 50% to 80% of the total annually, according to SwissRe.
Data from the National Oceanic and Atmospheric Administration’s Storm Prediction Center shows 5,879 reports of hailstones one inch or larger in 2022, up 17 percent from 5,020 in 2021. Preliminary data for 2023 show 6,962 reports, including a significant increase in reports of very large hailstones of two inches or more.
CCC data shows that hail-related auto claims have increased to represent at least 11.8% of all comprehensive claims in 2023, up from 9% in 2020. Historically, hail-related claims represented less than 2% of all comprehensive claims processed by CCC; in 2023, 2.7% of claims were the result of hail. (Figure 12)
Figure 12: Hail Percentage of Claims (2020-2023)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Another indication of hail-related damage is claims that include paintless dent repair (PDR). In 2023, 19.4% of comprehensive claims included paintless dent repair and 80% of claims identified as “hail” included PDR. Throughout 2023 – a year rife with hail damage claims – PDR was included on 19%-35% of repairable comprehensive estimates. (Figure 13)
Figure 13: % of Repairable Comprehensive Estimates with Paintless Dent Repair (PDR)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Comprehensive claims that include paintless dent repair have an average total cost of repair (TCOR) 28% higher than non-PDR claims, an average of $1,282 dollars in the 12 months ending in March 2024. (Figure 14)
Figure 14: Average TCOR for Comprehensive Claims with and without Paintless Dent Repair (PDR)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Comprehensive claims with PDR require an average of 159% more labor costs than non-PDR claims. Total labor costs for comprehensive claims with PDR averaged $3,972 between Q2 2023 and Q1 2024, while non-PDR comprehensive claims had average labor costs of $1,533, a difference of over $2,400. (Figure 15)
Figure 15: Comprehensive Claim Average Labor Amount - Claims with and without Paintless Dent Repair (PDR)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
PDR claims generally include fewer parts per claim, as the focus of the work is repairing existing panels and large areas of the vehicle's body, such as the roof, hood, trunk, lift gates, doors, fenders, and quarter panels. PDR claims include almost 50% fewer parts per claim - 6.6 over the past 4 quarters. Non-PDR comprehensive claims leveraged an average of 12.7 parts during that same period. (Figure 16)
Figure 16: Comprehensive Claim Average # of Replacement Parts - with and without Paintless Dent Repair (PDR)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
PDR claims are more likely to be on drivable vehicles and require less repair time. Of all PDR comprehensive claims that occurred between March 2022 and March 2024, 94.2% were drivable. For all non-PDR claims that occurred during this same timeframe, 65.9% were drivable. The average cycle time – vehicle into vehicle out days average – for drivable PDR claims was only 6.4 days, while drivable non-PDR claims averaged 11.1 days. (Figure 17) PDR claims are likely to have less time needed for teardown, part replacement, paint time, and diagnostics.
Figure 17: Vehicle In to Vehicle Out Days – Average Drivable PDR vs Drivable Non-PDR Comprehensive Claims
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
According to the U.S. Department of Energy, roughly 75% of residents in areas where hail is most likely to occur have a garage or a carport, which could indicate possible risk of vehicle damage for residents without physical vehicle coverage. (Figure 18)
Figure 18: Percentage and Share of Housing with Garage or Carport
SOURCE: DEPARTMENT OF ENERGY
And CCC data shows that hail claims are, on average, 21.7% (+889) more costly to repair than the average comprehensive claim and 25.6% (+1,020) costlier than the average repairable claim, exacerbating these increases in storm frequency and risk. (Figure 19)
Figure 19: Average Total Cost of Repair (TCOR) for Repairable Claims
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Unlike more dramatic events, hailstorms often strike without warning and can cause extensive damage that may not be immediately evident, like impaired sensors and cameras, versus dents and broken windows that are visible to the naked eye. This type of damage can lead to unexpectedly high repair costs and prolonged repair times, significantly impacting vehicle owners and repair shops. The cumulative effect of repeated hailstorms can strain the resources of insurers and repair facilities.
A recent hailstorm in the Midwest caused significant damage to vehicles and homes. Between March 12 and March 16, 2024, CCC saw over 20,000 comprehensive claims from the affected area, compared to the average of roughly 147 comprehensive claims per day on the other 27 days in March. (Figure 20)
Figure 20: Indexed Comprehensive Claims Volume - % of Total Losses and % of Drivable Total Losses (March 2024)
SOURCE: CCC INTELLIGNT SOLUTIONS INC.
According to CCC data, insurers declared 15,000 unexpected repairable claims in and around the affected area, with ~5,000 of them declared by the insurance carrier as total losses. If the average repairable hail claim is ~$5,000 and the average total loss valuation is ~$12,000, the auto losses from this one hailstorm could potentially exceed $130M. (Figure 21)
Figure 21: Preliminary Estimate of Claims Volume and Cost of Repairable and Total Loss Claims Hailstorm - 3/14/2024
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Severe weather events are now affecting regions that have historically experienced fewer such events. Hailstorm-prone areas continue to expand in the Midwest, and hurricanes are reaching further inland. Areas previously considered safe from severe storms are now experiencing significant impacts.
As a result, the upcoming hurricane season poses significant risks for a broader geographic region. Based on the data, this is particularly concerning as the U.S. population shifts and boundaries between rural and urban exposure blur.
Migration Shifts
According to U.S. census data, states that gained the most population since 2000 include: Nevada, Utah, Idaho, Texas, Arizona, Florida, Colorado, Georgia, North Carolina, Washington, South Carolina, and Delaware, in large part due to job opportunities, affordable housing, desirable climates, and tax favorability.
For states like Florida, which has been hit by more storms than any other U.S. state (120 hurricanes, 37 Category 3-5 storms), and Texas, the next most hurricane-prone state with a total of 64 major storms and the most hailstorm-prone state with 1,123 major hail events in 2023, population increases could be a cause for concern among insurers that cover these areas.
The Florida Chamber Foundation forecasted a state population increase of 225,000-275,000 in its economic predictions for 2024, and six of the top 10 U.S. counties with the largest residential growth rates between 2022 and 2023 were in Texas. And these are just two examples of high-growth states. Others include Arizona, North Carolina, and Georgia.
Big Business Rural Migration
In tandem with people migration, large corporate operations – like warehouses and manufacturing facilities – are shifting or adding operations in rural settings, transforming demographic and economic landscapes.
Relocation to rural areas generally presents financial benefits for corporations, especially when they move operations to states with no or low corporate income tax like Nevada, Texas, and Florida. These U.S. states are, unsurprisingly, three of the top six that have seen the largest population growth since 2020. There are 9 total U.S. States that don’t have income tax and 6 of the top 20 states in terms of population growth since 2020 are also no income tax states. (Figure 22)
Figure 22: Top Marginal Corporate Income Tax Rates as of January 1, 2024
SOURCE: TAXFOUNDATION.COM
This commercial sprawl into rural areas in states with no income tax not only amplifies potential property and auto damage but can also burden local insurance and repair services that may not be scaled for increased demand.
Staff Up
As the 2024 hurricane season approaches, it’s crucial for auto claims management teams to ensure they are adequately prepared to handle the potential surge in claims. This can include utilizing third-party personnel and specialty vehicle valuation teams to supplement existing staff.
Form CAT Teams
CAT teams are comprised of adjusters who specifically respond to catastrophe claims. As staffing challenges persist, carriers may sometimes resort to redirecting non-catastrophic adjusters to focus on major storm-related claims. This is where digital claims management tools can be most effective, enabling less experienced adjusters and increasing claims teams’ capacity to ensure they meet policyholders’ needs during peak times.
Utilize Claims Management Technologies
Claims management technologies can help reduce the need for carriers to put personnel physically on the ground and streamline repeatable processes so as not to burden their already overworked adjusters. This approach can vastly improve the employee experience while also ensuring storm-related claims are settled accurately and efficiently.
Prepare for Downstream Impacts
As economic challenges persist for consumers, the potential for vehicle damage to go unrepaired continues to rise, especially as motor vehicle costs rise. As of April, the consumer price index for motor vehicle insurance was +22.6% year-over-year and +41.7% since April of 2022.
In efforts to decrease insurance costs, consumers may be electing to drop first party coverages (collision and comprehensive) on older vehicles and/or vehicles without lienholders. Another method to decrease insurance premiums is to increase deductibles.
CCC continues to see gradual shifts in claims towards higher deductibles. $1,000 comprehensive deductibles have increased by 3 points in the past 24 months (ending in March 2024), while less comprehensive claims include $100, $250, and $500 deductibles. (Figure 23)
Figure 23: Common Comprehensive Deductibles | Q1 2022 vs. Q1 2024
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
If vehicles don't have adequate first party coverage or a high deductible that a policyholder is unable to meet, the likelihood of damages getting repaired surely decreases – especially superficial or aesthetic ones. As a result, the potential for unreported and unrepaired prior damage increases, which can complicate future claims and decrease the value of the asset (the vehicle).
Another growing concern is the impact of undiagnosed or unrepaired electrical and safety systems, which could be damaged during weather events, including hurricanes and severe convective storms.
Assess Repair Inventory
Hurricanes and other severe storms may impact supply chains, potentially halting or delaying parts deliveries to shops, which can impact productivity. While the unpredictable nature of weather events can make planning ahead difficult, there are two ways shops can prepare for this possibility:
* Learn more about CCC Parts here.
Communicate Clearly and Regularly
Given the unpredictability of storms, it's important for carriers to engage with policyholders by maintaining open and transparent communication throughout the hurricane season, providing timely updates on storm forecasts, evacuation orders, and claims procedures to help mitigate losses and get people out of harm’s way.
Repair shops, which benefit from clear customer communication throughout the year, can consider leveraging existing digital communication tools, and even social media, to provide updates on repair timelines, temporary operation hours, rental car availability, alternative transportation routes, and more.
The 2024 hurricane season looms large, and while major hurricanes garner significantly more attention for their dramatic impacts, evidence suggests that even the smaller storms can critically strain auto claims and repair industry resources. Preparing with robust strategies and technologies is crucial to weathering the storm ahead, as is adjusting strategies based on new intelligence.
Leveraging advanced AI-powered technologies that analyze historical data and produce predictive analytics can help businesses better forecast the severity and the probable impact areas of upcoming storms, allowing insurers and repair facilities to allocate resources more effectively and prepare for a surge in claims and repairs. Automated claims processing can also help speed up the initial assessment phase, helping to reduce bottlenecks and improve customer satisfaction.
* Learn more about CCC’s AI technology here.
According to May's Insurance Information Institute & Milliman forecast, the P&C industry ended 2023 with a net combined operating ratio (NCOR) of 101.6%, an improvement of 0.8% versus 2022. This was a notable improvement relative to January’s estimate, where the industry was expected to finish 2023 at a 103.9% NCOR. The improvements were attributed to premium growth, expense ratio improvements, and favorable loss performance in Q4. Personal auto ended 2023 with an improved combined ratio of 104.9, 7.3 points better than 2022. Notably, the trends from Triple-I & Milliman indicate that physical damage loss ratios outperformed liability by 7% in Q4. (Figure 1)
APD Figure 1: P&C Industry NetCombined Operating Ratio (2017-2026)
SOURCE: INSURANCE INFORMATION INSTITUTE & MILLIMAN (UPDATED JANUARY 2024)
Vehicle Sales & Vehicles in Operation
While reduced new vehicle availability at the onset of the pandemic led to decreased new vehicle sales, those challenges have largely been replaced by a different set of economic barriers.
According to the Federal Reserve Bank of St. Louis, Total New Light Weight Vehicle Sales remain below 16 million vehicles on a 12-month moving basis. The U.S. averaged 17.26 million new lightweight vehicles sold on a 12-month moving basis from September 2015 through February 2020. As the supply of new vehicles is up +30% year-over-year (per Cox automotive, as of Q1), consumers are currently facing continued elevated new vehicle prices, financing costs, and general economic woes as a result of inflation – all of which continue to slow the recovery of new vehicle sales.
According to Experian, 288.5 million total vehicles were in operation through Q4 2023. Experian also reported that 12 million vehicles were taken out of operation as of Q4 2023. According to S&P Mobility, the average U.S. vehicle age has now increased to 12.6 years, reinforcing the trend toward a more mature U.S. vehicle pool.
May 2024’s average APR was 7.3% for new vehicles and 11.5% for used. Both new and used APRs have reached points not seen since the Great Recession: New-vehicle APR last hit 7.4% in Q2 2007 (7.5%) and used-vehicle APR is the highest since Q4 2007 when it climbed to 11.4%. 17.3% of new auto loans have a monthly payment of $1,000 or more, down slightly from 17.9% in Q4 of 2023. Edmunds reported that in Q4 2023, 20.4% of new vehicle sales with a trade-in had negative equity, the highest in two years, and that consumers who are upside down in their auto loans owe an average of $6,064. It is notable that 30% (or more) of new auto loans had negative equity between Q1 2018 and Q2 2021. (Figure 2)
APD Figure 2: 12 Months – Moving New Light WeightVehicle Sales (Not Seasonally Adjusted)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
As of Q1 2024, auto loans accounted for 9.1% of total household debt (the quarterly average has been 9.3% since 2016). Total auto loan debt in the U.S. now exceeds $1.6 trillion.
According to the New York Federal Reserve Bank, 2.8% of auto loans became 90+ days delinquent in Q1 2024, up from 2.3% in Q1 2023. Though high, delinquency rates are below those of the financial crisis era, where rates were as high as 3.48% (Q2 2009).
Paid Claims Frequency Trends
According to FastTrack’s paid claim frequency trends, through Q4 2023, Auto Collision frequency has decreased two-hundredths of a percent in each of the previous two quarters. Liability (Property Damage) claims frequency has also flattened out over recent quarters and remains well below historic norms. (Figure 3)
APD Figure 3: 12 Months – Moving New Light Weight Vehicle Sales (Not Seasonally Adjusted)
SOURCE: FEDERAL RESERVE BANK OF ST. LOUIS
Comprehensive paid claim frequency continues to rise in recent quarters and appears to be at or near historic levels, much of which can be attributed to weather events.
Miles driven are +0.6% YoY through Q1 and +1.3% compared to 2019 (pre-pandemic). However, dangerous driving behaviors – speeding, distracted driving, aggressive driving, and impaired driving – continue to plague America's roadways.
Consecutive years of poor loss performance have driven auto insurance costs higher. The April consumer price index for motor vehicle insurance is +5.7% YTD, +22.6% YoY, and +47.1% compared to 2019. Inflation for all items has increased by 1.4% YTD, +3.6% YoY, and is +21.2% relative to April 2019. (Figure 4)
APD Figure 4: Paid Claim Frequency Trends
SOURCE: TOP INDEPENDENT STATISTICAL SERVICE (ISS) FASTTRACK | BOTTOM U.S. DEPARTMENT OF TRANSPORTATION FEDERAL HIGHWAY ADMINISTRATION
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 5) 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 5: IRC Uninsured Motorists Rate (2017-2022)
SOURCE: INSURANCE RESEARCH COUNCIL
Used Vehicle Values
Through April, the consumer price index for used cars and trucks is -6.5% YoY. Wholesale indexes, which generally serve as leading indicators for retail pricing, reflect any further decreases. The Manheim Used Vehicle Value Index is -14% 2024 through April and the Black Book Used Vehicle Retention Index is -14.6% during that same period. (Figure 6)
APD Figure 6: 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)
Total Loss Frequency
Year-over-year through May 2024, CCC data indicates a 1.6% increase in vehicles being declared total losses by insurance carriers in 2024 relative to 2023, primarily due to the continued erosion of used vehicle values and an increasingly mature vehicle pool, as over 73% of valuations across all loss categories are for vehicles 7 years or older. (Figures 7 and 8)
APD Figure 7: CCC National Industry Total Loss Share of Claim Count (CY 2013-2024)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
APD Figure 8: CCC National Industry Total Loss Share of Claim Count (CY 2016-2024)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
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.
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. Through May 2024, CCC has seen an overall decrease of -8% YoY, with an average adjusted vehicle value of $13,684. (Figure 9)
APD Figure 9: 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:
The percentage of total losses as a result of theft continues to remain above historic norms yet continues to slowly decline following peaks in 2022. (Figure 10)
APD Figure 10: CCC National Industry Thefts as Percent of Total Loss Valuation Counts (CY 2016-2024, by Quarter)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
* Learn more about CCC’s ADP solutions here.
The vehicle repair industry has shown signs of improvement following the apex of prolonged cycle times and elevated costs that bled into 2023 after an especially challenging Q4 2022.
When we reported on the average total cost of repair (TCOR) last quarter, 2023 stood at 5.1%. Since then, TCOR has grown to 7%. (Figure 1)
Vehicle Repair Figure 1: CCC National Industry, Average Total Cost of Repairs - All Loss Categories Repairable Appraisal Statistics
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Historically, auto physical damage loss development is relatively swift; however, recovering backlogs and prolonged cycle times continue to delay the maturation of data. The average TCOR for Q1 2024 currently stands at $4,611 – a 3.3% increase relative to Q1 2023 ($4,464). This increase may indicate that TCORs are beginning to fall back in line with inflationary trends.
Parts Costs
Following years of 7.3% and 5.4% increases in average parts costs, the average price per part increased a modest 0.1% in 2023; this is a slight decrease from the 0.8% change provided in our Q1 report. Through Q1 2024, the average price per part is -0.2% year-over-year. (Figure 2)
Vehicle 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 rate of change for the average number of parts per appraisal appears to be slowing 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 stands at 13.6 parts per repair and Q1 2024 averaged 13.8 parts. (Figure 3)
Vehicle Repair Figure 3: CCC National Industry Non-Comprehensive Repairable Appraisals - Average Number of Parts Replaced per Claim
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Total Cost of Repair (TCOR) Contribution
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 (44%) of the increase, while non-paint labor accounts for the largest contribution increase. (Figure 4)
Vehicle Repair Figure 4: Average TCOR Change vs 2018 – Contribution by Type (2019-2024, Collision & Liability)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Labor Rates
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. Year-over-year, labor rates are +3.2%; however, when only comparing first quarters, labor rates are +5.2% in 2024.
The average number of labor hours per appraisal in 2023 increased slightly to 27.5 hours, also following large jumps in back-to-back years (2021 and 2022). Q1 2024 appears stable at 27.3 hours. (Figure 5)
Vehicle Repair Figure 5: 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 a year prior – in 2021 and 2022. (Figure 6)
Vehicle Repair Figure 6: CCC National Industry Average Labor Rates per Labor Category CY2018-CY2024
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
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)
Vehicle 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, vehicles going into the shop, and repair time – continue to improve, though both productivity and cycle times still lag pre-pandemic levels. Based on the current data, Q1 2024 saw a large decrease in cycle times, as vehicles were able to get into shops for repairs over six days less than in Q4. Also, average repair time decreased by 2.2 days. While these trends are likely to develop further, they are indicative of decreased shop backlogs, lower severity repairs, and increased productivity. (Figure 8)
Vehicle Repair Figure 8: CCC NationalIndustry DRP Repairs - Quarterly Cycle Times Comparison
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Q1 2024 data currently reveals significant quarter-over-quarter drops in average time for vehicles to go into a shop for repairs following estimate completion. While we should anticipate Q1 results to increase for this metric as the data develops, the general trend reflects continued improvements in shop backlogs. (Figure 9)
Vehicle Repair Figure 9: CCC National Industry DRP Repairs Estimate Sent to Vehicle In Days Average by Drivable Flag
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
This is also 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 weeks in Q1 2024, and, most recently, 2.7 weeks in Q2 2024 – a two-week improvement versus prior year! (Figure 10)
Vehicle 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 – saw marked improvement in Q1 2024 for non-drivable vehicles. Productivity should remain a focal point for the collision repair industry. As compared to pre-pandemic productivity levels, cycle times for labor require an average of four additional days for drivable vehicles and eight days for non-drivable vehicles. (Figure 11)
Vehicle Repair Figure 11: DRP Repairs Comparison
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Despite evolving customer sentiment, slow infrastructure execution, and relatively high average new vehicle prices, the electric vehicle segment continues to grow. Electric Vehicles (EVs) now make up 1.1% of vehicles in operation (~3.3 million vehicles) while internal combustion engine vehicles account for 92% of the mix.
EVs represented 2.4% of all repairable claims in Q1 2024, up from 1.6% in Q1 2023 according to CCC’s estimating data. (Figure 12)
Vehicle Repair Figure 12: ElectricVehicle (EV) and Non-EV CCC National Industry Estimate Volume (2018-2024)
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 2.5 years, while the average repairable non-EV is 7.25 years old. 77.7% of repairable EV estimates are for vehicles 3 years old or newer; 48% of repairable non-EVs are 7 years or older in the first quarter of this year. (Figure 13)
Repair Figure 13: EV and Non-EV Vehicle Age and TCOR
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
EV Repair Costs
According to Cox Automotive, the average new vehicle transaction price in March 2024 was $47,218 while the average electric vehicle was $54,021 (+14.4%). The average EV costs 46.9% more than the average non-EV to repair. However, as we must emphasize, this is not an apples-to-apples comparison.
The non-electric vehicle segment of the car parc is larger and more mature than the emerging EV segment. 77.7% of Q1 2024 repairable EVs are 3 years old or newer, while 26.1% of non-EVs are 3 years old or newer. For vehicles 3 years old or newer, the average Q1 2024 EV TCOR was 6,682, which was 19.5% higher than non-EVs within the same age group.
Appraisal Parts and Labor
Labor accounts for the largest contribution to the difference between EV and non-EV repair costs for vehicles 3 years old or newer. Labor accounted for 43.5% of total repair costs in EVs 3 years or newer and 34.8% for non-EVs in the first quarter. Parts are almost the exact opposite – 38.9% for EVs and 44.6% for non-EVs. (Figure 14)
Repair Figure 14: CCC National Industry EV vs Non-EV: 3 Years Old or Newer (2023)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
In Q1 2024, non-EVs 3 years or newer averaged 29.8 labor hours per appraisal, while EVs from the same model years required 34.4. (Figure 15)
Vehicle Repair Figure 15: CCC NationalIndustry EV vs Non-EV Common Part Groups Comparison (Q1 2024) – LessAttachments
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
On average, labor costs were 49.3% higher per estimated repair on EVs in Q1. This is a slight decline from the average of 55.9% in 2023. While parts costs neared parity in 2022 between EVs and non-EVs, parts costs per estimate for EVs are beginning to increase relative to non-EVs. The gap was only 0.4% in 2022; it increased to 2% in 2023, and now stands at 4.2% in Q1.
Cycle Times
For 2023, the average time between last estimate and vehicle out has developed to 52.3 days, almost 12 days more than non-EVs. Getting the vehicle into the shop added 6.6 days and repairs required an additional 4.7 days. (Figure 16)
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.
Vehicle Repair Figure 16: CCC National Industry DRP Repairs Cycle Time Comparison (Updated Through Q1 2024)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Valuation Trends
A comparison of the percentage of vehicles declared by insurers as total losses 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 declared by insurers as total losses 2% less for current year or newer vehicles, 1% less for vehicles 1-3 years old, and 2% less for vehicles 4-6 years old. (Figure 17)
Vehicle Repair Figure 17: CCC National Industry EV vs. Non-EV Repairable Vehicle Age Comparison (Q1 2024)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
In Q1, insurers declared only 9% of EV estimates as total losses, compared to 22% of non-EVs are – both of which represent increases relative to the prior year. As the data indicate, non-EVs total losses skewed older. More than 73% of all vehicles declared by insurers as total losses were 7 years or older, compared to 30% of appraisals for all non-EVs aged 7 years or older that were declared total losses by insurers. (Figure 18)
Vehicle Repair Figure 18: CCC NationalIndustry EV vs. Non-EV % of Claims Declared Total Loss by Vehicle Age
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
* Learn more about CCC ONE® Total Repair Platform here.
As we move deeper into 2024, casualty claim frequency is stabilizing, while medical treatment costs continue to rise, especially for 3rd party casualty, where cost increases continue to solidly outpace general inflation and health care inflation as measured by the Consumer Price Index.
High-dollar procedures such as outpatient surgery, steroid injections, CT scans, and emergency room evaluation and management show hyperinflation, where some costs have more than doubled over a four-year period. Persistently high auto premium increases (+22% from March ‘23 to March ‘24) continue to drive unprecedented levels of consumer shopping and switching. We continue to see significant increases in the number of Uninsured or Underinsured Motorist injury claim submissions as a growing percentage of households struggle to absorb rising costs.
Impact Severity
Impact severity (Delta-v) remains comparable to Q1 2023, still well above pre-pandemic baseline levels.(Figure 1)
Casualty Figure 1: Average Delta-v by Claim Create Date | Collision and Liability Claims (2021-2023)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Airbag Deployment
Airbag deployment percentage dipped below 6% as of March 2024 (Figure 2)
Casualty Figure 2: % of Claims with Airbag Deployment | Collision & Liability Claims (Through Q1 2024)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Claim Frequency
Paid bodily injury claim counts have been stabilizing roughly 15% below the pre-pandemic baseline. (Figure 3)
Casualty Figure 3: Paid Claim Count byQuarter | Personal Auto Bodily Injury (Through Q4 2023)
SOURCE: ISS FAST TRACK
Claim Indemnity
The average 3rd party bodily injury paid outcome is now $26K per injured party, representing a 6.5% increase since Q4 2022 and a 39% increase since Q4 2019. (Figure 4)
Casualty Figure 4: Average $ Paid Per IPby Quarter | Personal Auto Bodily Injury (Through Q4 2023)
SOURCE: ISS FAST TRACK
Auto Medical Billing vs CPI Health Care
3rd party auto medical care inflation consistently outpaces overall health care inflation, as measured by the consumer price index, contributing to significant cost pressures on insurers. (Figure 5)
Casualty Figure 5: Medical Bill Inflation% Change Over 12 Months
SOURCE: CCC INTELLIGENT SOLUTIONS INC. & U.S. BUREAU OF LABOR STATISTICS
The average 3rd party medical bill dollar amount submission per injured party increased 3% since Q1 2023. (Figure 6)
Casualty Figure 6: Average Medical Bill $Submitted per Injured Party (Through March 2024)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
3rd party bill line severity has increased 6% since Q1 2023. (Figure 7)
Casualty Figure 7: Average Medical Bill $ per Bill Line Excluding Duplicates (Through March 2024)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
The largest severity increases in key volume states since Q1 2023 have occurred in Pennsylvania, Washington, and Georgia. (Figure 8)
Casualty Figure 8: Key States Avg Medical Bill $ Submitted per Bill Line | % Change Q1 2023 vs Q2 2024
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Procedures
The distribution of procedure dollars shows increases in Radiology, Evaluation & Management, & Surgical in Q1 2024. Drilling further into procedure category gains, price increases occurred in nearly all subcategories, with bill frequency increases also occurring for CT scans, MRIs, and High-Level Eval & Management. (Figure 9)
Casualty Figure 9: Percentage of Medical Bill $ Submitted by Procedure Category (Through March 2024)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Significant cost inflation is evident when comparing the average line level cost of certain radiology, outpatient surgery, and evaluation and management procedures over a four-year period (Q1 2020 vs Q1 2024). (Figure 10)
Casualty Figure 10: Frequency and Avg Medical Bill $ Per Line Q1 2023 vs Q1 2024
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Outpatient surgical procedures (including injections) have effectively doubled in average $ billed per line since Q1 2020, while CT scans have increased 82%, and High-level Eval & Management have increased 48%. (Figure 11)
Casualty Figure 11: Average $ Billed per Line | Service Dates Q1 2020 vs Q1 2024
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Earlier Outpatient Surgery & Radiology
The average number of days between the date of loss and treatment has decreased for outpatient surgery and diagnostic procedures compared to pre-pandemic (Q1 2020), with notable cost increases on those same procedures. (Figure 12)
Casualty Figure 12: Average DOL to Service Date (Days) & Average $ Billed Per Line | Service Dates Q1 2020 vs Q1 2024
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
We've observed continued increases in the percentage of 3rd party claims submitted for injuries caused by an uninsured or underinsured motorist (+94% since Q1 2021). This is consistent with unusually high inflation of personal auto premium costs (+22% from March '23 to March '24) driving increased policy shopping and higher uninsured/underinsured rates. (Figure 13)
Casualty Figure 13: Percentage of 3rd Party Features Submitted as Uninsured or Underinsured Motorist (UM/UIM) (Through March 2024)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
According to CCC's 1st Party data, 1st Party Personal Injury Protection (PIP) claim frequency is stabilizing at 17% below pre-pandemic baseline. (Figure 14) PIP claim indemnity per injured party increased 10% from Q4 ‘22 to Q4 ’23. Increases slowed in 2023. (Figure 15)
Casualty Figure 14: Paid Claim Count by Quarter | Personal Auto PIP (Through Q4 2023)
SOURCE: ISS FAST TRACK
Casualty Figure 15: Average $ Paid PerInjured Party by Quarter | Personal Auto PIP (Through Q4 2023)
SOURCE: ISS FAST TRACK
Medical Billing Costs
1st party bill line severity has increased 3% since Q1 2023. (Figure 16)
Casualty Figure 16: Average Billed Per Line Less Dups by Client Received Date (excludes bills > $250K) (Through March 2024)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
For key volume states, the most notable line level increases since Q1 2023 have occurred in Pennsylvania, Florida, North Carolina, and Colorado. (Figure 17)
Casualty Figure 17: Key States | % Change in Average Billed Q1 2023 vs Q1 2024
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
The distribution of procedure dollars shows notable increases in Surgical and Radiology in Q1 2024. (Figure 18)
Casualty Figure 18: Procedure Categories | % of $ Billed by Client Received Date (Through March 2024)
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Drilling further into Radiology and Surgical growth, movement is driven by both cost and frequency increases within most procedure subcategories. (Figure 19)
Casualty Figure 19: Procedures | Frequency and Average $ Billed Q1 2023 vs Q1 2024
SOURCE: CCC INTELLIGENT SOLUTIONS INC.
Severe weather events don't typically present significant subrogation opportunities, except for wildfires and, to a lesser extent, hailstorms and floods. But when they do occur and claims volumes spike, subrogation teams are sometimes re-tasked to assist with first party claims handling, leaving their subrogation files sitting dormant while they tackle the surge in claims.
The following are examples of potential weather-related subrogation opportunities and strategies to pursue them.
Wildfire Subrogation Opportunities
Many carriers are actively pursuing subrogation opportunities in areas where wildfires are caused by local utility providers' negligence. Significant wildfire events in Texas, Colorado, California, and more recently in Hawaii have all been attributed to power lines and/or transformers that caused sparks, igniting the dry grass below.
Pacific Gas & Electric (PG&E) in California, for example, paid $11 billion in settlements to insurers and re-insurers that actively pursued subrogation recoveries for property claims filed after the 2017 Northern California wildfire and the 2018 Camp Fire, which destroyed many vehicles and homes in the area.
Figure 1 below shows the top 4 carriers’ average subrogation recovery results from 2013 to 2022. The noticeable spike in recoveries between 2017 and 2018 can be attributed to the homeowners claims specific to these wildfires.
Subrogation Figure 1: Top 4 Carriers Aggregate Homeowner Subrogation & Salvage as a % of Loss Payments
SOURCE: AM BEST
Hailstorm Subrogation Opportunities
Hail and severe wind events can create opportunities for subrogation, typically in cases where roofs or other building components were not properly installed to begin with and, as a result, were damaged by the storm. The challenge here is to balance the carrier’s top priority of investigating and closing files quickly with the need to conduct a thorough investigation that includes complete documentation and evidence preservation.
Flood Subrogation Opportunities
Flood claims – either an independent flooding event (e.g. river rising, sewer backup, etc.) or resulting from a hurricane – present occasional opportunities for subrogation.
One opportunity is when flooding causes significantly more damage to a building structure because it was improperly designed, installed, or maintained. The other is a breach of contractual obligation. Businesses that may be most affected by flooding enact specific contractual arrangements with their suppliers and vendors to minimize the negative consequences of a flood event. A good example of this is the low-lying areas along the Mississippi River that are prone to flood.
These types of subrogation opportunities may appear to take more time and require a higher level of claims investigation expertise for successful recovery (e.g., asking the right questions, documenting conditions, collecting all the necessary information, etc.), but for a homeowner paying thousands of dollars in a deductible (1% of policy limit) or a business that pays millions of dollars for their self-insured retention, it’s important for subrogation professionals to spend the extra time identifying and pursuing these recoveries.
* Learn more about CCC's Inbound Subrogation solution here.
© 2024 CCC Intelligent Solutions Inc. All Rights Reserved. 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.
