In the December edition of CCC Trends Susanna takes a look at customer satisfaction in P&C insurance. CCC’s Analytics team examined customer satisfaction data from over 250,000 surveys and its findings challenge the historically accepted belief that cycle time is the key factor driving customer satisfaction. While cycle time and claim cost are closely correlated and still important, insurers can do more to raise customer satisfaction.
Analysis of vehicle claims data for 2015 to date shows the rate at which vehicles are being totaled versus repaired has risen for the industry. With more vehicles falling into the older ages, and with more vehicles with repair costs that reach higher percentages of the loss vehicle ACV, more vehicles overall are being totaled. Susanna examines the factors driving this increase and when can we expect to see it start to trend down.
Analysis of recent census data through July 2014 by William Frey of the Brookings Institute confirms populations in the U.S. large cities have continued to grow. Data from the U.S. Department of Transportation shows the U.S. population grew by 12.2 percent, from 282.2 million residents to 316 million between CY2000 and CY2013. In addition to shifting to the West and South, the U.S. population has become increasingly urban, with the most growth occurring in the suburban areas. With suburban residents typically relying on their vehicles to commute to work and other places, this is yet another factor adding to increased road congestion in the U.S. Nationally, the U.S. has seen steady growth in the overall number of miles driven and the growth in new vehicle registrations.
Economic growth has resulted in miles driven, accident frequency, and road fatalities returning or exceeding levels last seen in 2007. Susanna examines shifts in driving patterns, mileage growth rates on urban and rural interstate roadways and the impacts on traffic safety. Growth in urban and suburban areas, more freight traffic, and more vehicles on the road overall have led to more complex mobility on U.S. roads indicating further lifts in auto claim frequency in the near future.
Take a look at some of the large shifts within the demographics of the U.S. in terms of the age and population make-up that did not slow during the recession and the impact of the growing diversity of the U.S. population on our industry.
Considerable numbers of vehicle registrations annually continue to come from those in the U.S. aged 55-plus than Millennials. Insurance companies and collision repairers need to build a focus on the group of the population aged 55-plus and older which continues to change, and remains a very large opportunity with some of the lowest rates of unemployment and the most wealth of all other age brackets.
Recent reports show automotive claim frequency and costs to be on the rise again. Increasing vehicle complexity – both in terms of the materials used in the construction of the vehicles as well as an increased number of standard options, growth in the average number of parts replaced per claim as well as more labor hours per claim are largely to blame for the rise in repair costs. Higher total loss frequency for the older vehicles are driving up claim costs further.
Susanna looks back at the first part of the year and offers an outlook on claim counts, repair costs, and total loss values for the rest of the year. Most economists anticipate the U.S. will still see growth bounce back just as it did last year after growth fell in Q1 2014. Auto sales have been strong, employment numbers have improved, gas prices remain low, and miles driven are up. These factors combined with the volatile weather patterns suggest the industry can expect that frequency and claim costs will continue to trend up moderately throughout the remainder of this year.
Insurers and repairers have benefited from greater use of technology to share the information needed to fulfill work in a transparent, compliant, and complete manner.
Susanna discusses the growth of MSO’s and the advancements in technology instrumental in supporting repair shop networks. As repairers and insurers jointly manage cycle time from the date the loss is initially reported, through appraisal and vehicle drop-off, to ultimately vehicle pickup, the industry benefits from better productivity and customer satisfaction.
Join Susanna for a recap on trends in the first quarter of 2015 and see how claim counts and severity in early 2015 compare to the last couple of years. 2014 saw some serious weather batter large parts of the U.S. and newer technology enter the market - factors impacting the APD industry in a large way. We discuss repair costs impacted by parts replacements and raising vehicle complexity due to newer vehicles entering the claim mix and the impact of winter weather claims particularly in the Northeast and the Midwest.
As we look at the automotive claims and collision repair industries, numerous factors suggest we’ve returned to a healthier market, but a market that is dramatically different than in 2007.
New vehicles manufactured today are changing the landscape for insurers and collision repairers. Greater vehicle complexity from lightweight materials, complex construction, sensors and cameras demands the industry have access to information on how to properly repair the vehicle, and to the necessary equipment, tools and training to repair the vehicle correctly.
CCC’s Crash Course 2015 further discusses how changes within today’s vehicle fleet and its drivers will drive frequency and cost trends in the future.
In early 2014 we provided our customers with our predictions around auto claim frequency and severity, looking specifically at the potential for economic growth, new vehicle sales, parts and labor costs, and total loss frequency. Join Susanna as she revisits CCC’s predictions from last year around auto claim frequency and severity, looking specifically at the potential for economic growth, new vehicle sales, total loss frequency, parts and labor costs. Next month we'll discuss in detail some of the larger trends we're beginning to see in 2015.
The collision repair industry has experienced a great deal of change over the last several years. The recession helped drive already flat-to-declining vehicle accident frequency down further, and more customers were opting not to have minor damage repaired. In addition, with the average age of vehicles on the road in the U.S. at an all-time high, more damaged vehicles were deemed total loss versus repairable. In 2014 however it appears the collision repair industry may have turned the corner.