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Capturing mileage across a shifting auto insurance landscape

In the altered landscape that constitutes the post-pandemic “new normal” for personal auto insurance, precision may become a watchword for insurers seeking to strike the right balance between caring for their customers and keeping their business on a solid footing.

One factor profoundly affected by COVID-19 lockdowns has been miles driven: Down more than 40 percent in March and April 2020, according to J.D. Power data.1 The cause seems clear—stay-at-home orders, school closures, and employees working remotely—but where mileage goes next is anything but certain. It could bounce back quickly, as when the partial reopening of Georgia’s economy was followed by a 13 percent jump in daily inbound trips to the state.2 But once people find relief for their cabin fever, longer-term shifts may occur, exerting a push and pull on mileage trends:

  • Wider adoption of work from home may reset norms for commuting and miles driven.
  • Those who continue to commute may favor personal cars over crowded trains or buses.
  • New attitudes may emerge toward ridesharing, suburbanization, mass transportation, and autonomous-vehicle innovations.
  • Summer vacationers may stay closer to home, driving rather than flying to their destinations.
  • There’s a known correlation between lower gas prices and higher miles driven, but it’s not clear whether this will hold during the COVID era.

The elusive mileage metric

Miles driven is a long-established and powerful rating factor that’s also notoriously hard to capture with high precision. Where insurers use mileage, its application may be based on decades-old assumptions about typical driving patterns. Now, with seismic shifts in driving patterns—both short-term effects of the pandemic and potential long-term changes in American lifestyles—there may be no more critical time for insurers to focus on measuring mileage as accurately as possible.

Compounding the urgency is a regulatory environment in many states that could likely limit some insurers’ ability to broadly raise rates, at least for the balance of 2020. On the contrary, some state regulators, such as the California Department of Insurance, are requiring personal auto insurers to issue premium refunds.3

Meanwhile, severity trends appear up as motorists have been driving and crashing at higher speeds on nearly empty roads,4 and the longer-term rise in repair costs may continue as vehicles become more complex. Finally, the gradual lifting of lockdown restrictions may cause frequency to turn back upward.

Seeking the path of least resistance

The result could be a squeeze on insurers that forces many to turn to other-than-rate-filing actions to sustain premium income and try to maintain underwriting profitability. A renewed focus on premium leakage may become a key element in insurers’ strategies, and miles driven is a common source of leakage. As much as 60 percent of policies contain underreported mileage, causing $5 billion in annual premium leakage for insurers.5

Eliminating even a small portion of premium leakage could be the practical equivalent of a rate increase, with the added benefit of improving rate integrity because an insurer can more precisely rate, including higher rates on risks with higher loss potential.

Picking the right measuring tool

Insurers can choose among an array of methods to capture miles driven for both new and renewal business, depending on the weight of this factor in their rating plans and how they prioritize precision and cost efficiency. They range from advanced InsurTech solutions to sophisticated but economical tools based on predictive analytics:

  • Actual odometer readings—in near real time—from consenting owners of connected cars in the Verisk Data Exchange.
  • Verified mileage captured from odometer readings by sources such as state inspections, auto maintenance service providers, and dealers.
  • Highly accurate mileage estimates from an actuarial model for new vehicles and those for which there is not enough odometer data.

Verisk’s range of MileageConfirm solutions can be implemented separately or through LightSpeed® Auto, Verisk’s one-rate personal auto acquisition platform. And in this time of rapid change, insurers can rate for the future, not the past; MileageConfirm users have the option to exclude any COVID-19 impacts that may distort mileage history.

ISO’s personal lines auto rating manuals already contain filed rating rules, mileage bands, and factors an insurer can use to implement annual mileage rating into its class plan.

  1. “Auto Insurance During COVID-19: Premium Relief: Consumer Impact and Outlook”, J.D. Power, published on Hubspot, May 14, 2020. < >, accessed on June 2, 2020.
  2. Mallika Kallingal, “Visitors Rushed to Georgia as Businesses Reopened, Says University of Maryland Study”, CNN, May 6, 2020. <>, accessed on June 2, 2020.
  3. Insurance Commissioner Ricardo Lara, Bulletin 2020-8–Premium Refunds, Credits, and Reductions in Response to COVID-19 Pandemic, June 25, 2020, <>, accessed on August 3, 2020.
  4. Kevin Stankiewicz, “USAA chief: Coronavirus ‘Cabin Fever’ May Be Behind Car Crash Uptick After Initial Steep Decline”, CNBC, May 4, 2020. <>, accessed on June 2, 2020.
  5. The Challenge of Auto Insurance Premium Leakage, Verisk, February 2017. <>, accessed on June 10, 2020.

To get more mileage into your rating plan, learn more about our solutions or contact your Verisk account executive.

Ron Wiest

Ron Wiest is a product manager for ISO Personal Lines. He can be reached at

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