With most COVID-19 social changes occurring in March 2020, April 2020 was the first full month to offer data reflecting how the pandemic has impacted the auto claims landscape.
COVID-19 has had a dramatic impact on claims. In mid-March to early April, claims departments implemented changes to move their adjusters to a virtual work from home environment, and the claims landscape also began to change. April being the first full month of COVID changes, the industry saw average increases in severity for Collision and Property Damage slightly below pre-COVID months. Additionally, we evaluated payment trends in the first ten days after the date of loss that addresses virtual claims handling. Finally, this edition highlights an emerging trend regarding uninsured motorist (UM) coverage. Therefore, this month’s update includes a section for early loss payment analysis and UM impact following the April loss trend charts below.
Note: Except for post-COVID claims count analysis, our data scientists examined loss trend data for April 2020 for Collision and Property Damage coverages and updated the Bodily Injury numbers through November 2019 through a 180-day view. We base this information on claims paid and closed at a coverage level, and within a specific window of time. The statistics provided below are all calculated with 12-month rolling averages on this internal research.
The industry saw a 6.3% increase in April 2020 for Collision severity. This is down slightly from 6.5% in March 2020. Regarding the number of claims paid and closed, we saw a -4.3% decrease from April 2019 to April 2020, down from a 0.1% change in March 2020. This is due to fewer claims in March and April 2020. “In our weekly tracking for Collision in early April, we observed Collision claim counts bottom out in claims reported while steadily rebounding in subsequent months. While claim counts were dropping, we observed claims closing at a faster rate between 3-5% faster,” said Reena Batra, Director of Claims Data Science for LexisNexis® Risk Solutions.
Property Damage Severity
The U.S. Insurance Industry continued to see an increase in Property Damage severity with a 6.6% increase in April 2020, down just slightly from a 6.7% increase in March 2020. The number of auto claims paid and closed was down -7.2% from April 2019 to April 2020. In March 2020, claims paid and closed saw a -2.4% decrease from February. This is due to fewer claims in March and April 2020. “We observed claim counts at their lowest point in our weekly tracking of incoming claims for Property Damage in early April and since then have seen a steady rebound. While claim counts were dropping, we observed claims closing faster by about 3%,” said Batra.
Bodily Injury Severity
The U.S. Insurance Industry had an uptick in Bodily Injury of 0.4% in November 2019 from October 2019, tallying a 7.4% increase. For the number of claims paid and closed, we saw a 6.5% increase in November 2019, down from 6.8% in October 2019.
The financial impacts of COVID are beginning to take a toll on the industry as we are seeing a 30% increase in the rate of uninsured motorist claims relative to total auto claims. The financial pressures of unemployment may be manifesting itself, and we will evaluate this in May for any changes in the market.
COVID Severity Analysis
We see reduced severity in initial first payments made in 0-10 days from the date of loss and an increase in secondary (supplemental) payments on these claims. However, after secondary payments, we see similar total payment performance as we do with our 12-month severity trends. Click here to learn how claims automation could help to shorten claims cycle time, reduce costs, and facilitate a better customer experience.
Note: We base all percentages on a 12-month rolling year-over-year percentage change, except for the auto claim counts analysis after COVID.
LexisNexis Risk Solutions is committed to supporting the insurance industry with timely reporting of critical metrics. Reach out to your LexisNexis Risk Solutions account representative for carrier-specific reporting on key performance indicators.*
*Expanded views are available for LexisNexis® Claims Discovery users.