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Insurance professionals are challenged to keep up with claims trends. When it comes to total claims costs, auto insurers have experienced the greatest rate of change.

Auto insurance claims are increasing due to a years-consecutive rise in total accidents. Many policyholders across the country have noted surprising increases to car insurance premiums as insurers account for not only a rise in accident-related claims, but also profitability margins amidst inflation, pandemic recovery, climate catastrophe, auto repair parts and labor costs.

WaterStreet Company’s P&C Insurance Solutions allow carriers to access all the data needed to form predictions.

Recent Claims Trends

The year 2021 saw a substantial increase in total insurance losses for Property and Casualty Insurers, amounting to a staggering $30 billion, according to McKinsey Research.

This surge in losses followed a period of untimely difficulties with industry profitability. During the pandemic, many policyholders revised insurance coverage and shopped around to decrease at-home costs. Following the pandemic, the country has experienced unexpected inflation spikes, raising the costs to build homes and manufacture cars as well as tightening the budgets of businesses and policyholders alike.

Catastrophic events, including wildfires and hurricanes, are on the rise and affecting unprecedented regions of the country. Many insurers today struggle with loss reserves and have turned to catastrophe modeling to help predict and mitigate risk.

1. Rising Non-Fatal Car Accidents

The National Highway Traffic Safety Administration reported a startling 16% increase in non-fatal car crashes in 2021. Of particular concern is the category of accidents where only property was damaged, which saw a 20% increase from the previous year. These statistics underscore the importance of comprehensive auto insurance coverage, as the rising number of accidents puts more pressure on insurance companies to settle claims efficiently.

2. Greater Fatal Car Accidents

For insurance professionals specializing in auto insurance, the increase in fatal car accidents is a deeply troubling trend. The National Safety Council Injury Facts reveals that car accidents remain the leading cause of death in the United States. Comparing the years 2019 to 2021, there were 7,873 more deaths in 2021, indicating a concerning rise in fatalities. This alarming trend underscores the need for robust life and accident insurance coverage.

3. Premium Increases After an Accident

As the total number of accidents across the country rise, premiums rise in direct response. Policyholders can expect rates to go up 20-50% after a claim. Insurers can aim to inform policyholders of the difference between no-fault and at-fault claims. Be sure to provide attention and care to policyholders as they are guided through the claims process for satisfaction with the experience.

4. Escalating National Average Insurance Premiums

National average insurance premiums have risen for policyholders of all kinds. According to Bankrate, the national average cost for annual full coverage insurance rose by over $240 in 2023, reaching a total of $2,014. This increase directly impacts consumers and businesses alike, making it imperative for insurance professionals to help policyholders navigate these changes effectively.

5. Climate Change Losses

Areas of the country most affected by climate change have experienced the sharpest increases in car insurance premiums, placing the greatest burden in concentrated regions. According to The Washington Post, car insurance premiums have surged by an average of 17% from 2022 to 2023 while Florida, Colorado, Nevada, New York, Nebraska, and South Carolina have experienced the sharpest increases. These rate hikes can be attributed to several nation-wide factors in addition to regional catastrophe losses with exceptionally large payouts.

WaterStreet Company for P&C Insurance

Insurance professionals must adapt to these changes by staying informed, providing sound advice to policyholders, and exploring innovative solutions to mitigate risk. The need for comprehensive insurance coverage has never been more evident, and addressing these trends head-on will be vital for the industry’s continued success.

WaterStreet Company supports insurers with next-generation P&C Policy Administration Software. We provide insurers a cloud-based solution with an advanced API to grow with the company.

Reach out to WaterStreet Company today to request a consultation and demo.

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