Surprising Trends in Auto Claims Frequency and Severity

By Tamara Flinn May 15, 2017

Indications are Americans will drive more but crash less—welcome news. Yet despite the decrease in the number of accident claims, auto insurance loss costs are mounting. That’s because claim severity is increasing at a rate that’s outpacing the decline in claims frequency. A number of factors are contributing to losses, and we’re looking at how they are likely to play out in the future.

Auto Insurance Industry Losses Are Forecast to Rise in the Short Term

According to the Insurance Research Council, loss costs for both auto bodily injury and auto personal injury protection increased substantially between 2005 and 2013. While the reduction in auto claim frequency helped offset losses, the costs of injury claims skyrocketed. The average cost per bodily injury claim grew 32 percent to $15,506, and the average cost per claim for personal injury protection grew 38 percent to $8,017 over the same period.

In the short term, “loss costs likely will continue to increase.”[1] Vehicles are equipped with ever more expensive safety technology, such as airbags and collision prevention sensors. The high price of medical services to treat injuries is also likely to contribute to losses, because healthcare prices “do not tend to go down over time.”[2]

Technology Improvements Set to Drive Down Auto Insurance Costs

Expensive safety technology is predicted to pay off for drivers and insurers over the long term, however, reversing the current trend. The development and adoption of collision avoidance systems and autonomous driving technologies will reduce human error and distracted driving, leading to significant reductions in accidents, injuries, and fatalities. By 2040, these technologies are expected to mature and dominate the market. When they do, they could reduce auto accident frequency as much as 80 percent, offsetting the current trend of increasing claim severity. As a result, industry loss costs are predicted to decrease from $145 billion in 2013 to $85 billion in 2040.[3]

For questions about the ways ISO Claims Partners’ Liability Navigator™ can help you manage claims now and in the future, please contact Tamara Flinn at Tamara.Flinn@verisk.com.

[1] Hanover Research. “Emerging Trends in Automobile Injury Claims,” 2016.
[2] Ibid.
[3] KPMG. “Automobile Insurance in the Era of Autonomous Vehicles.” 2015.


Tamara Flinn

Tamara Flinn is the director of product management for ISO Claims Partners. She oversees Liability Navigator as well as product development, new customer implementations, and product and customer support. Tamara has more than 15 years in personal auto liability claims and management and 5 years in consulting. She works in the Columbia, South Carolina, office.