U.S. auto insurance trends are undergoing a ‘revolution’ – report

“The jury is still out on the long-term effects of these market trends on the auto insurance industry,” said Adam Pichon, vice president and general manager of home and auto insurance at LexisNexis. “While we have seen some traditional trends reappear in terms of miles driven and insurance purchase volumes, we have had another roller coaster year due to volatile activity in claims severity, change of insurance, more serious traffic offenses and purchase of vehicles due to macroeconomic conditions.

“Add to this growing consumer interest in telematics data and an active regulatory and legislative environment, and we see more signs of an industry revolution than a rebound.”

Key highlights from the 2022 U.S. Auto Insurance Trends Report include:

  • Auto insurance purchases and new business growth figures were volatile for the second year in a row.
  • Riskier driving behavior created a “notable change in the combination of driving offense data”; an abnormal increase in major speeding offenses coincided with another annual increase in the number of road deaths.
  • The severity of claims increased even as more normal driving habits returned. But the number of ‘keys’ needed to close a complaint did not improve – 29% of consumers said they had to speak to three or more people to resolve their complaint.
  • Vehicle shortages and supply chain issues have led to lower car sales and slowed the adoption of advanced driver assistance systems (ADAS).
  • Miles traveled rebounded from the traditional patterns seen in 2019, but carriers now see a benefit in more accurate readings from connected vehicles.
  • 71% of US consumers are interested in usage-based telematics insurance for discount purposes, according to a previous LexisNexis study in 2021. But consumer adoption remains much lower.
  • Some states are introducing legislation that may restrict the type of data collected for risk-based insurance rating.

The findings match an earlier LexisNexis report, which found that for the fourth quarter of 2021, U.S. auto insurance purchase growth fell to -5.2%, from -3.9% in the third quarter of 2021. The analytics firm noted that this drop came as an industry reaction to vehicle shortages and rising claims costs.

Read more: Car insurance in the United States – what happens to the claim?

Pichon said insurers armed with accurate and comprehensive data are “prepared to price and rate more accurately, manage claims more effectively and improve customer experience in the face of changing market stressors.” .

LexisNexis postulated that 2022 could be another year of volatility in vehicle and insurance purchases. The company also said that the current economic uncertainty and continued risky driving behaviors suggest that claims severity for 2022 will remain high and that it will continue to monitor the regulatory environment.

“The insurance industry is in a critical phase,” Pichon said. “There are so many unknowns, and insurers of all sizes who adapt by using data and analytics to improve their workflows and meet customers where they are will be positioned to take better, more informed decisions and gain market share.”