2020 was a year like no other. While we are continuing to compile the complete year-end results, we see some new trends that may continue beyond the pandemic. Over the last three months of our tracking, we observe a consistent severity increase of 11.6% on Bodily Injury claims closed within 90 days. Additionally, we continue to see a higher ratio of Bodily Injury claim settlements within the first 90 days. As reported in last month’s blog, more physical damage claims are now paid within the first ten days, which we believe is driven by the rapid shift to virtual claims since the outset of COVID-19. It appears likely that the shortening in claim settlement cycle time for both physical damage and bodily injury claims may become the new norm.
Bodily Injury Severity
Bodily Injury (BI) severity claims for 90-day early settlements ticked up 0.2% in August, but overall remained steady with June and July. The industry saw a three-point increase in BI severity for 90-day settlements since March 2020. The number of claims paid and closed dropped to their lowest point in August 2020 and are now down 9.7%, continuing the decline that started in April.
When looking at our 180-day settlement view, total U.S. Bodily Injury severity increased in May 2020 to 8.0% from 7.2% in April and 6.2% in March 2020. The last time the industry saw 8% growth in severity for longer-term settlements was in July of 2017. Regarding the number of claims paid and closed, they are down 5.7% in May, dropping further from the decline of 1.9% in April 2020.
The rate of change in October for Collision severity was 4.3%, no different from September. We see some stability over the last few months, where the increase in severity has been between 4.2% and 4.3%. Claims count paid and closed within 30 days was 15.8% lower than the same month the prior year, down further from the decline of 14.2% the month prior. This is attributable to fewer claims since March 2020 and is the lowest percentage change we’ve seen in the data. While claim counts are dropping, we continue to see more Collision claims closing within one month―on average 3% more since the pandemic began.
Property Damage Severity
October severity continued to decline, down 0.2% from September. We are starting to see this decline stabilize. Overall Property Damage severity is down 1.5 points from March 2020. The claim counts paid and closed was 20.9% lower than the same month the prior year. This decline was 2.4 points more than the decline in September 2020.
Uninsured Motorist Claims
We continue to see an average increase of 20% in the rate of Uninsured Motorist claims relative to total claims over the months since the pandemic began.
We are getting closer to reporting year-end 2020 results; our next blog will have results through November 2020.
Note: All percentages are based on a 12-month rolling year over year % change.