2024 LexisNexis® U.S. Auto Insurance Trends
Report shares insights for insurers to help benchmark future rating
decisions with today's trend data, evolve against new risk segments
and navigate the road to profitability
ATLANTA, June 20,
2024 /PRNewswire/ -- Today, LexisNexis® Risk
Solutions released its 2024 U.S Auto Insurance Trends Report, which
aggregates annual market data about consumer driving patterns, auto
insurance shopping trends, claim frequency and severity, and
consumer responses to rate increases to help insurance carriers
better understand the evolving trends impacting the U.S. auto
insurance industry.
Key takeaways
- Risky driving behavior rises among younger demographics
as distracted driving violations by Gen Z increased 24% from
2022 and a staggering 66% in comparison to 2019.
- High claim severities persist due to parts and labor
shortages along with rising attorney involvement, with
93% of claimants who sought legal counsel likely to retain
services in the future.
- Consumer dissatisfaction around total loss remains high,
as roughly half (46%) of auto insurance consumers note
frustration with a lengthy claims process.
- Auto insurers are taking an aggressive approach to
profitability challenges with an unprecedented 14%
year-over-year rate increase in 2023, improving the combined
loss ratio to 105i%, a 7-point improvement over
112%ii in 2022.
- Consumers are responding in a big way as elevated rate
increases have led to record auto insurance policy shopping and
switching levels, with new policies increasing by 6.2% in
2023. Consumer retention rates dropped from 83% to 80%,
indicating there may be a need for insurers to focus on their
existing portfolios and take steps to update their underwriting
practices over the course of 2024.
- Differing driving experiences in electric vehicles (EVs) have
contributed to higher and more severe claims than internal
combustion engine (ICE) vehicles. In 2023, claim frequency and
severity for EVs were 17% and 34% higher, respectively, than
traditional segments.
"Auto insurers are navigating a dynamic and challenging market
environment in 2024. For their part, consumers are displaying more
unpredictable driving and policy shopping behavior, and
increasingly switching carriers to find better rates," said
Adam Pichon, senior vice president
of global analytics, insurance, LexisNexis Risk Solutions. "It is
crucial for insurers to balance market acquisition and retention
with rate adequacy and utilize data-driven insights to help manage
risk and maintain profitability to be set up for continued success
as the market begins to soften."
Gen Z drivers and EV technology bring newfound risk
- Both major speeding violations (up 10% from 2022-2023, up
36% since 2019) and minor speeding violations (up 16% from
2022-2023, up 15% since 2019) continue to increase.
- Distracted driving is more prevalent among younger drivers,
especially Gen Z. From 2022-2023,
violations for the age group increased by 24% and, compared to 2019
figures, have risen 66%.
- Distracted driving across all age demographics rose 10% from
2022-2023.
- In 2023, EV sales grew 54% compared to Light Duty
Vehicles (LDVs) sales growth of 13%iii. The total
number of EVs insured grew by 40% to 3.9 million in 2023,
while the number of private passenger vehicles (PPAs) insured grew
by only 1.2% in the same period, to a total of 265 million.
- Regarding consumer EV shopping behavior, 24% of new EV
buyers shopped around for lower rates on their auto insurance
policies in 2023, significantly higher than the 19% of new PPA
buyers that shopped for coverage last year.
Claim severity and complexity continue to rise
- Claim severity continues to challenge the insurance industry as
claims severities have steadily trended upward since the pandemic.
Compared to 2020, bodily injury has risen by 20%, along with
severity as material damage has increased by 47%.
- Attorney involvement has helped contribute to the rise in
claims costs. Over half (51%) of claimants who hired
an attorney received a higher settlement amount. This activity is
most prevalent following an auto accident, as 85% of
claimants were approached by one attorney and 60% by more
than one.
- The time required to settle a claim is the highest
determinant of customer satisfaction, followed by the number
of people and touches needed to resolve the claim.
- In 2023, over a quarter (27%) of collision claims were
deemed total losses, requiring payouts and consumers to replace a
vehicle or find alternate transportation.
Profitability remains a challenge against heightened shopping
activity
- Despite overall combined ratio improvements in 2023, insurers
are still working towards profitability in many states with
additional rate increases being enacted across the country.
- In response to the record-setting rate increases (9% increase
in 2022 and 14% in 2023), traditionally stable consumers have taken
to the market to shop their coverage. Among consumers who had auto
insurance at the end of 2023, 41% shopped at least once for a new
policy. Overall, shopping increased 4.7% in 2023, with many
consumers switching carriers, driving new policies up 6.2% in the
same period.
- Over 2022-2023, the number of drivers within a policy
increased by 5%, pointing to changing risk profiles that may be
overlooked during renewal periods and potentially indicating
consolidation in households.
Download the 2024 LexisNexis Risk Solutions Auto Insurance
Trends Report.
About LexisNexis Risk Solutions
LexisNexis® Risk Solutions harnesses the power of data,
sophisticated analytics platforms and technology solutions to
provide insights that help businesses across multiple industries
and governmental entities reduce risk and improve decisions to
benefit people around the globe. Headquartered in
metro Atlanta, Georgia, we
have offices throughout the world and are part of RELX (LSE:
REL/NYSE: RELX, a global provider of information-based
analytics and decision tools for professional and business
customers. For more information, please
visit www.risk.lexisnexis.com, and www.relx.com.
Media Contacts:
Chas
Strong
LexisNexis Risk Solutions
Phone: +1.706.714.7083
Charles.Strong@lexisnexisrisk.com
i Copyright @2024, S&P Global Market
Intelligence (and its affiliates, as applicable)
ii LexisNexis Risk Solutions Internal Analysis
iii Argonne National Laboratory
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