Severe weather is transforming the auto insurance industry. This means insurers must adapt to changing weather patterns and increasing unpredictability. CCC recently released its second quarter Crash Course report that shares information about severe weather events and insights gleaned from its historical data about claims and repair costs.
Focused on the impacts of severe weather events on the auto insurance and repair industries, the report gives timely details on the future of the industry. Read more about the findings and how changing weather patterns are impacting the insurance industry in this blog.
The Impact of Severe Weather on Auto Insurance and Repairs
The report found that severe weather events are affecting parts of the country that did not previously experience these events. Hailstorms and tornadoes happen across the country, hurricanes are pushing further inland, and wildfires are less predictable. As one example, hail-related auto losses rose to almost 12% of all comp losses in 2023, up from 9% in 2020. Along with the increasing frequency of these losses, severities rose as well with average repair costs for hail claims rising 15% over the last three years.
The impacts of changing weather patterns have been exacerbated by changing populations, as well. People moved during the pandemic and populations shifted into areas more affected by storms, like hurricanes in Florida or hailstorms in Colorado. More people living in wildfire-prone areas, for example, can stress the local resources and push homes and civilization into areas that were previously uninhabited. In California alone, the number of homes in the wildland-urban interface area has grown by 40% since 1990.
This influx of new residents to storm-prone areas stresses repair shops and local insurance resources. It is more challenging to inspect vehicles after a storm and shops may have long wait times, reduced capacity, and fewer rental vehicles available. These growing repair times have affected the total cost of repair. The CCC report indicates that the average total cost of repair (TCOR) increased by 3.3% in the first quarter of 2024 compared with last year’s numbers. The total cost of repair is being driven up, in part, by increased labor and parts costs although the data showed cycle time is down.
The CCC report noted other trends impacting repair costs and the auto insurance industry rates, including the impact of electric vehicles on costs, rising casualty and first-party medical expenses, and subrogation challenges. With these pressures, it is clear the auto insurance industry needs to control costs wherever possible.
The Role of Agents
Agents and brokers can help explain these pressures to policyholders who are concerned with rates or repair costs. They can discuss the impact of severe weather and changing weather patterns with insureds, particularly those who reside in areas that are prone to severe weather. And they can help insureds shop around for better rates at renewal and find all applicable discounts to offset growing rates.
Another helpful tip for policyholders is to educate them about ways to manage and mitigate their individual risks. Taking the time to analyze your insured’s risks and working with them to offer resources and advice is invaluable, especially during challenging times. As premiums continue to rise, agents can offer more value to policyholders through education and risk mitigation.
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External Links:
- https://www.cccis.com/reports/crash-course-2024/q2#APD
- https://abc7.com/feature/wildfire-homes-high-risk-fire-areas-living-with-fires/14041834/#:~:text=In%20Nevada%2C%20the%20number%20of,has%20grown%2040%25%20since%201990.
