COVID-19’s evolving impact on the personal auto market is still unfolding. Keeping up-to-speed on trends and projections can help prepare for the road ahead.
The personal auto market in 2020 was characterized by shopping volatility, an uptick in dangerous driving, and fewer claims but increased severity—all making for a disruptive year, according to LexisNexis' 2021 U.S. Auto Insurance Trends Report.
Consumer auto insurance shopping rose to an all-time high, with 41% of policies having at least one driver shop for other coverage—5.3% higher than in 2019, which was itself an all-time high.
The rollercoaster year saw shopping drop in the initial shutdown orders in March 2020 and then rebound when the first round of stimulus checks hit bank accounts in mid-April. Shopping again dropped during the periods of social unrest in the summer, as well as during the major severe weather events in the third quarter of 2020.
Driving behavior in 2020 experienced nearly as many swerves. After stay-at-home orders in March, miles driven plummeted, and then increased in the summer before stagnating in the third and fourth quarters of 2020. One possible explanation was the continuation of remote work policies, as well as drivers taking advantage of online shopping rather than in-store shopping or dining out. Overall, normalized mileage hovered between 83%-88% of 2019 levels during the second half of 2020.
While fewer miles were driven, risky behavior increased, such as distracted driving. From mid-March 2020, high-speed driving averaged 10% higher than during the same period in 2019. And while overall traffic violations were down in 2020, conforming to miles driven, major violations increased. In fact, fatalities rose in the third quarter by 13%.
DUI violations have been trending downward over the past several years and continued to do so in 2020, with the exception of Generation Z. Gen Z experienced an approximate 50% increase in recorded violations of March and April of 2020. One explanation may be that Gen Z is one of the segments most dependent on ride-sharing pre-pandemic. Additionally, young adults have been especially vulnerable to alcohol abuse during the pandemic, according to a study by the University of Arizona.
Carriers saw fewer auto claims in 2020, with a 19% decrease in the number of collision claims paid and closed. Collision severity saw a 3.7% year-over-year increase in 2020, slower than the 6.6% rate of 2019. Carriers also experienced an increase of 4.8% in property damage severity, a growth rate slower than the 6.3% of 2019. And the number of paid and closed property damage claims decreased by 25.2%.
However, bodily injury claims showed greater severity despite fewer claims. The number of bodily injury claims paid and closed decreased by 15.3% in a year-over-year comparison between October 2019 and October 2020. But in the same month, carriers were seeing a 12.7% increase in severity, a much faster growth rate than the 7.1% in 2019.
“When we look at all of the 2020 auto insurance trends, we can see a pattern that comes from a series of disassociated events," said Adam Pichon, vice president and general manager, auto insurance, LexisNexis Risk Solutions. “While the evolving impact of the pandemic is still unknown, understanding these trends and evaluating their projections can help insurers make better business decisions and more confidently prepare for the future regardless of unexpected market turbulence."
AnneMarie McPherson is IA news editor.