The Rise in Cost of Auto Collision Repairs Examined  October 6th 2023

CCC Webinar Breaks Down Rise in Total Cost of Repairs, Other Trends

Miles driven and average cost of repair are both on the rise, but more in line with pre-pandemic increases.

CCC Intelligent Solutions offered a look at industry stats and trends as of mid-year during a recent webinar hosted by the Collision Industry Electronic Commerce Association (CIECA).

Bart Mazurek, vice president of consulting services for CCC, said vehicle miles traveled through the first five months of this year, according to the U.S. Department of Transportation, was running a bit ahead of 2022.

“When we compare it to [pre-pandemic] 2019, it's actually fairly similar except for the April timeframe,” Mazurek said, which means there’s been “a noticeable bump compared to last year.”

More miles driven generally means some increase in vehicle accidents. And claims this year are, perhaps not surprisingly, involving a continued increase in the total cost of repairs. DRP claims in the first quarter of this year averaged $4,444, up $223 from the average for all of 2022.

But that 5.3% increase is more in line with the increases seen in 2019 and 2020, and significantly smaller than the jumps in total cost of repairs in 2021 (10.6%) and 2022 (14.3%).

While the increase should be good news for shops, the breakdown of those total costs may mean fewer dollars on the bottom line for collision repairers. In 2019 and 2020, according to CCC data, labor accounted for as much as 40.4% of total repair costs. That’s dropped by about two percentage points in 2022 and the first quarter of 2023, as parts and other costs---which generally have lower profit margins for shops---have increased as a percentage of the total costs of repairs.

John Yoswick, Autobody News

Home and auto insurance cost increases stretch Americans’ budget

Inflation is cooling across many spending categories, bringing much-needed relief to American families struggling to manage rising costs. But the price of home and auto insurance continues to rise, with insurers pointing to rising repair costs and an increase in disaster-related claims as the culprits.

If rising insurance premiums (aka, your monthly or quarterly payments) are stretching your budget, you’re not alone. According to a survey conducted by Assurance IQ in September 2023, most Americans with insurance (63%) experienced an increase in their home or renters insurance premium in the last 12 months. Even more (67%) saw their auto insurance premiums rise. Just over half (51%) said they are cutting spending on nonessentials because of rising insurance prices, while 45% are saving less money.

Over half of Americans (57%) indicated they were either “extremely” or “very concerned” about being able to handle future increases. On the home insurance front, around 13% of respondents said rising home insurance rates were prompting them to consider moving to a different state altogether.

So, how can you bring down the cost of insurance, while continuing to protect your home and vehicle?

Nationwide to retire its Private Client brand

Nationwide has recently sent out an update to partners about its decision to limit its HNW appetite and eventually retire the Private Client brand.

“After a strategic review of our portfolio, we have decided to narrow our Private Client business by focusing on the mass affluent portion of the business. More complex risks that require specialized products and services, fitting within a more traditional private client offering, will be beyond our go-forward risk appetite.

We anticipate limiting our new Private Client appetite to mass affluent risks over the next several weeks and will begin non-renewals for business that does not align with our mass affluent appetite in 2024. In late 2024, we anticipate beginning to migrate all Personal Lines business to a single operating model and platform. At the end of this transition, the Nationwide Private Client brand will be retired and our standard and mass affluent products will be offered under Nationwide Personal Lines.

This decision does not impact our standard personal lines business, small commercial, middle market, farm/agribusiness, E&S/S or Nationwide Pet policies or any of our Nationwide Financial businesses. Within Nationwide personal lines, we remain committed to partnering with agencies to extend strong multi-line protection in the standard and mass affluent marketplace for the long-term

NICB Pushes D.C. Lawmakers to Crack Down on Fake Vehicle Tags

The National Insurance Crime Bureau (NICB), the nation's leading not-for-profit organization exclusively dedicated to combatting and preventing insurance crime, is pushing the Washington, D.C. City Council to approve legislation that would provide law enforcement agencies with additional tools to combat counterfeit vehicle tags in the District of Columbia. The use of fraudulent tags has become common for criminals looking to mask their identities, making it difficult for law enforcement to track down getaway cars, hindering law enforcement's ability to identify suspects, and enabling drivers to plot easier escapes and evade tollways. The Washington, D.C. City Council held a hearing this week focused on the Fraudulent Vehicle Tag Enforcement Amendment Act of 2023, which would address this growing problem.

"The use of fraudulent, temporary vehicle identification tags continues to be a widespread problem in the District and across the country," said 88Eric De Campos, Director of Strategy, Policy and Government Affairs for the National Insurance Crime Bureau**. "Criminals are using long-expired or outright counterfeited tags to create 'ghost cars,' which are then used to facilitate other violent crimes such as shootings and carjackings, both within the District and in surrounding jurisdictions. This legislation will help deter bad actors and criminal organizations and help law enforcement investigate individuals who knowingly produce and distribute fraudulent tags."

Cleanup from Maui Fires Complicated by Island’s Logistical Challenges, Cultural Significance

Cleanup of areas destroyed in the Maui wildfires could end up being one of the most complex to date, federal officials said, given the island`s significant cultural sites, its rich history including a royal residence and possibly remains of people who died in the disaster.

The first stage of cleanup started in late August, with around 200 Environmental Protection Agency workers in white protective gear removing toxic household debris from Upper Kula and the town of Lahaina including gas cylinders, pesticides, fertilizers and battery packs used in solar power. They have monitored the air quality and sampled for heavy metals and asbestos.

The EPA expects to hand over responsibility later this month or in November to the U.S. Army Corps of Engineers, which will oversee removing the remaining debris over the next six to 12 months. About $400 million has been budgeted, but the cost could go higher to remove an estimated 400,000 to 700,000 tons of building debris from about 1,600 parcels that once had homes and businesses.

“This will be the most complex fire response to date,” said Corps’ debris subject matter expert Cory Koger, who since 2017 has responded to cleanups of seven wildfires sites including the Paradise, California fire that killed 85 people and destroyed 19,000 structures as well as several others in Oregon, Colorado and New Mexico.

“We need to expedite the cleanup for a number of reasons. One, they’re still residents living within the area. There are businesses still functional … That’s a public health issue,” Koger continued, adding that there are also significant “cultural concerns” associated with the debris removal.

“There is this push-pull of doing it quickly but doing it right,” he said.

The Aug. 8 wildfire killed at least 97 people and destroyed more than 2,000 buildings, most of them homes. Seven weeks on, the first group of residents returned to survey the remains of their property and collect any belongings they could find.

Compared to fire cleanups in Oregon or California, this one poses what EPA Incident Commander Steve Calanog calls “unique challenges” for his team. The debris removal not only is occurring on an island in the Pacific Ocean, but Maui has no landfills certified to take hazardous waste. So the EPA is forced to ship hazardous waste to licensed disposal sites on the West Coast.

Stakes are High and Consumer Confidence is Fragile for Automated Vehicles, J.D. Power Finds

Consumer confidence in fully automated, self-driving vehicles continues to decline for a second consecutive year, according to the J.D. Power 2023 U.S. Mobility Confidence Index (MCI) Study,SM released today. The index score for consumer automated vehicle (AV) readiness declines 2 points to 37 (on a 100-point scale), contributing to the 5-point decline from 2021. Consumers show low readiness on all metrics with the lowest level of comfort riding in a fully automated, self-driving vehicle and using fully automated, self-driving public transit. Public opinion and consumer comfort are affected by a lack of general knowledge about AV technology development compounded by media coverage that highlights robotaxi and testing failures.

“Automated driving technology is still very much in an evolving and testing stage with improvements occurring quickly. Consumers’ understanding of where we are on the path to long-term automated mobility needs to be calibrated as today’s systems are not designed to enable more risky driving.”

Confidence soars, however, for consumers who have ridden in a robotaxi in Phoenix or San Francisco with an MCI index score of 67, which is almost double the index score (37) of those who haven’t ridden in a robotaxi and is indicative of experience being critical to full-scale AV adoption. These positive firsthand experiences need to be shared with the public to educate, providing balance to the negative news cycle. Consumer comfort is higher in the West region of the country, a region familiar with AV testing and deployments.

“Consumer trust is fragile, but it is the foundation upon which long-term AV acceptance is built,” said Lisa Boor, senior manager of auto benchmarking and mobility development at J.D. Power. “This first-time feedback from robotaxi riders shows significant growth in consumer comfort levels across any AV application. Industry stakeholders must seize the opportunity to build confidence and promote the technology across all transportation modalities through these first-hand experiences but, for success, it cannot be overshadowed by endless deployment issues.”

The percentage of consumers who believe fully automated, self-driving vehicles are available today has increased across all transportation modalities. It is encouraging that consumers are able to accurately cite examples of available AV delivery services (e.g., Amazon, Domino’s), robotaxis (e.g., Waymo, Cruise, Uber) and commercial transport applications. However, consumers inaccurately cite examples of personal vehicles available to purchase or lease today, as 22% indicate that “Tesla” or “Autopilot” are fully automated.

The world’s most valuable insurance brand revealed

Despite experiencing a dip in brand value, the world’s five most valuable insurance brands retain their places on Brand Finance’s latest Insurance 100 rankings. The brand valuation consultancy’s annual report lists the world’s most valuable insurance companies based on “the value of earnings specifically related to brand reputation.”

In this article, Insurance Business delves deeper into the insurance brands that made it to the latest rankings’ top 10. If you want to know how the recent economic climate has impacted the performance of the industry’s biggest brands, then this piece can give you an idea. Read on and learn more about the most valuable insurance companies in terms of brand reputation.