Claims severities continue to rise as we see even more spikes in bodily injury severity while collision and property damage severities appear to be moving back up to pre-COVID levels. As costs across the board continue to increase, and as the industry prepares for more traffic volumes on the roadways, will loss ratios soon exceed pre-COVID levels? The impact of increasing bodily injury severity, along with more normalization of physical damage severity, plus the potential return of pre-COVID traffic could mean losses may soon exceed pre-COVID levels. We show trends and analysis based on LexisNexis claims loss data below.

Bodily Injury Severity

Bodily injury severity with 90-day early settlements decreased to 13.2% in April 2021, a 1.8% decrease from March 2021. Overall, this is almost a 4.8-point increase from March 2020, although it appears the year-over- year change has begun to trend downwards. The number of claims paid and closed is now down 18.5% in April 2021 compared to April 2019 prior to COVID. This decrease is smaller than the 25.6% decline observed in March.

Note:  All percentages are based on a 12-month rolling year over year % change.

When looking at our 180-day settlement view, total U.S. bodily injury severity increased in January 2021 to 14.0% from 12.7% in December 2020 and 6.0% in March 2020. Regarding the number of claims paid and closed, the decline continues, and claims paid and closed are now down 26.2% in January, dropping 13.6 points more from August 2020.

Collision severity

Collision severity in June 2021 is 6.9%, a 1.9% increase from May. This is the largest increase we have seen since August 2020. We will continue to monitor this trend and see how it progresses. The number of paid and closed claims within 30 days was 5.2% lower than the same month prior year, a smaller decline than the 6.9% decrease in the month prior.

Property damage severity

In June 2021 the year over year increase in severity is 6.2%, a 0.9% increase from May. Similar to collision, this is the largest increase we have seen over the last six months. The number of claims paid and closed was 20.6% lower than the same month prior year. This decline was similar to the 20.8% decline in May.   

In summary, collision and property damage severity trends are returning to pre-COVID levels while bodily injury severity continues to trend well above pre-COVID levels. We will continue to leverage LexisNexis data to track claims industry trends on the Insurance Insights blog, and we would welcome your feedback on potential trends and topics to cover in the future.