With confinement and a shift to virtual claims handling, the dynamics have changed around insurance claims severity and payment patterns. We noted a significant change in the percentage of Uninsured Motorist claims in our last blog. Converse to the previous month, May saw a decrease in severity for Collision and Property Damage even as some markets began to ease lockdown restrictions.  In this case, the pattern continues but appears to be improving. It will be interesting to see if and when metrics will move closer to pre-COVID levels.

Note: Except for post-COVID claims count analysis, our data scientists examined loss trend data for May 2020 for Collision and Property Damage coverages and updated the Bodily Injury numbers through December 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.

Collision Severity

Total U.S. Industry saw 5.7% growth in May 2020 for Collision severity.  This number is down from 6.3% in April 2020 and is the lowest growth we have seen since early 2018.  For the number of claims paid and closed, we saw a 7.6% decrease from May 2019 to May 2020, down 3.2% from a -4.4% change in April 2020.  This is due to fewer claims in March, April, and May 2020 and the lowest percent change we have seen in the data.

Property Damage Severity

Total U.S. Industry continued to see an increase in Property Damage severity with 6.3% growth in May 2020, down just slightly from 6.6% growth in April 2020.  The number of claims paid and closed was down 10.4% from May 2019 to May 2020.  Claims paid and closed saw a 7.2 % decrease in April and a 2.4% decrease from March.  This is due to fewer claims in March, April, and May 2020. 

Bodily Injury Severity

Total U.S. Industry saw Bodily Injury severity drop by 0.5% in December 2019 from November 2019 with a 6.8% growth.  Regarding the number of claims paid and closed, we saw a 6.7% increase in December 2019, up from 6.5% in November 2019.

Uninsured Motorist

The financial impacts of COVID-19 are beginning to take a toll on the industry as we are seeing an average increase of 22% in the rate of Uninsured Motorist claims relative to total claims over the months since COVID-19 restrictions began (March, April, and May).

COVID Severity Analysis

Looking forward with our payment data, we are observing a change with the initial first payments made in 0-10 days from the date of loss.  These early payments are showing a significant decline in the initial payment amount when compared to 0 – 10-day pre-COVID-19 payments.  Conversely, we see abnormally large increases in secondary (supplemental) payments on this segment of claims as these claims ultimately close with final payment.   As we follow these claims to conclusion we are beginning to see an increase in overall collision payments for this segment of claims that is up about 11% over the same period in 2019 or 5% more than the run rate we saw in Q1 before the COVID-19 lockdown

Note:  We base all percentages on a 12-month rolling year-over-year percentage change, except for the claim counts analysis after COVID-19.

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