Claims activity in 2020 continues to vary significantly from all prior years as a result of COVID-19. The steepest decline in claims reported was in April 2020 and began to rebound during May and the following months. As the public continues to follow COVID-19 social distancing guidelines, many employers continue to offer work-from-home options, which has lessened rush hour traffic. These changes seem to be keeping accident counts at a level below the prior year. This article provides an update on our tracked results for 90-day Bodily Injury results through June 2020 and Physical Damage results through August 2020.
The dynamics continue to change during the COVID-19 crisis and are reflected in the differences in severity for physical damage claims and bodily injury claims. Climbing injury costs far outpaced both Collision and Property Damage through June. These changes are unprecedented in frequency and severity, and the long-term impacts will be a topic for discussion well into 2021.
Bodily Injury Severity
We continued to observe the impact of COVID-19 factors on Bodily Injury (BI) severity claims for 90-day early settlements. When looking at three months from the date of loss to the claim’s closure, claim severity for June 2020 was 11% greater than for June 2019. While overall claim counts remain lower in 2020, we continue to see a higher percentage of BI claims closing within three months from the date of loss.
Our 180-day settlement reports showed trends with a similar trajectory as before COVID-19. Over a six-month window, total U.S. Bodily Injury severity dropped further in March 2020 to 6.2% from 6.5% in February 2020. The number of claims paid and closed saw a 3.8% increase in March 2020―down from 6.5% in February 2020.
In August, the insurance industry saw the lowest severity growth in Collision claims over the last few years. Total U.S. claims severity increase was 4.2% in August 2020, down from 4.6% in July 2020. Claim count paid and closed within 30 days was 12.5% lower than the same month the prior year. This decline was sharper than the 10.8% decline from July 2020. This is attributable to fewer claims since March 2020 and is the lowest percentage change seen in the data. While claim counts are dropping, we see more Collision claims close within one month―on average more than 3% more since the pandemic began.
Property Damage severity
August also saw a continued decline in severity for Property Damage and claims paid and closed within 30 days. Year-over-year, Property Damage severity increase improved to 5.4% from 5.9% in the previous month. Claim count paid and closed was 16.1% lower than the same month the prior year. This decline was sharper than the 13.8% decline from July 2020.
Since the pandemic began, we have seen an average increase of 20% in the rate of Uninsured Motorist claims relative to total claims.
Stay tuned for September results to track critical industry trends. To read more articles on COVID-19 impacts on claims, visit the Claims section on our blog site.
Note: All percentages are based on a 12-month rolling year over year % change.