Personal auto claims from U.S. insurers rose sharply year-over-year in the first quarter as frequency and severity continued to increase for some public companies
A number of public insurers reported double-digit increases in their loss and claims expense ratios within the private auto class in the first three months of 2022, according to an S&P Global Market Intelligence analysis. Inflationary pressures, coupled with the return of miles driven to pre-pandemic levels, weighed on the profitability of the business segment.
Allstate Corp. recorded a year-over-year increase of 20.4 points in its auto claims ratio, the highest among the insurers examined in this analysis. The insurer’s auto combined ratio in the first quarter was 102.1%.
Of the six companies included in this analysis, The Progressive Corp. was the only company not to record a double-digit loss ratio increase. The insurer’s private motor claims ratio climbed to 76.2% in the first quarter from 68.1% in the same period a year earlier.
Kemper Corp.’s automotive combined ratio. was the highest during the quarter. The insurer’s preferred private auto segment posted a combined ratio of 118.5%, while its specialty, or non-standard, auto segment recorded a combined ratio of 110.8%.
Frequency of GEICO auto claims increases
Berkshire Hathaway Inc.’s GEICO reported double-digit year-over-year increases in auto claims frequency across all of its reported coverages. The largest increase, between 15% and 16%, occurred in collisions. Personal injury protection coverage saw claims increase by 14% to 15%.
In total, Progressive’s auto claims frequency increased 2% year-over-year in the first quarter of 2022. Claims frequency under auto property damage and personal injury protection increased by 3% and 2%, respectively. Collisions remained stable over the period, while bodily injuries decreased by 1%.
Allstate’s property damage auto claim frequency jumped 18.4% in the first three months of the year.
Collision severity also increases
Claims severity for collision coverage rose sharply at Progressive and GEICO, jumping 28% and 21%, respectively. The severity of property damage claims at Progressive also saw sharp increases in the first quarter.
According to CEO Tricia Griffith, the main drivers of collision severity and property damage trends at Progressive were the cost of replacement parts, car rentals extended for several days due to labor shortages in the workshops body damage and greater damage to vehicles in accidents.
Progressive saw a 6% decline in the severity of its injury protection claims, in part due to coverage reform in Michigan.
Claims severity for property damage and bodily injury coverage increased 11% and 8%, respectively, for Allstate in the first three months of 2022.
Rate relief coming in the coming quarters
Higher losses for insurers mean higher premium rates for policyholders, as America’s largest private auto insurers have received regulatory approval for some substantial rate increases.
The full impact of the rate increases has yet to be felt for Allstate, but the insurer expects it to happen over the next several quarters.