The sharp reduction in personal auto claims that followed COVID-19 shutdown orders began to fade away after the Memorial Day weekend, but frequency appears to be dropping again in reaction to a resurgence of the disease.
Andy Cohen, COO for Snapsheet, said claims frequency dropped by 40% to 50% after closure orders took hold, but auto claims ticked back up to a level about 20% to 25% below normal levels between Memorial Day and the July Fourth weekend.
“However, claim frequency turned back around to early-June, late-May levels as California, Texas, Florida and Arizona case counts grew dramatically after the 4th,” Cohen said in an email. “Countrywide claim frequency in July vs. July 2019 is down about 30%.”
A decision by State Farm, the nation’s largest private auto insurer, to file for rate reductions averaging 11% nationwide shows insurers are beginning to accept reduced claim frequency as the new normal---at least for the time being.
In its rate filings, the carrier reported claim volumes from March 29 through May 2 were 26% to 56% lower than the first two weeks of March 2019, according to a report by S&P Market Intelligence.
State Farm reported the 56% reduction in Hawaii, plus reductions of 55% in New Jersey, 46% in New York and 44% in Texas.
“Companywide, claim volume is starting to increase as drivers return to the roads,” State Farm said in a June 3 memorandum attached to its Texas filing. “We anticipate claims volume will be lower than before COVID-19 but higher than current levels.”
The Keefe, Bruyette & Woods investment banking company said the reduction in auto claims is showing up in carriers’ bottom lines.
A financial note by KBW analyst Meyer Shields said the personal auto loss ratio was 62.1% in June, compared to 72.1% in June 2019, and declined by double digit-percentage points four months in a row.
“Although there are some signs of plateauing driving [possibly related to rising infection rates in numerous states], overall mileage in July---and probably coming months---should stay well above April lows, particularly as seasonal driving patterns re-emerge,” Shields said.
A monthly Auto Claims Snapshot posted by CCC, a photo-estimate software provider, said claims involving property damage were down 25.7% in June compared to the previous year. That was an increase from May, when damage claims were 35% below the prior year.
Claims were down in every state except South Dakota, which suffered a 73% increase due to severe hailstorms. June-to-June decreases ranged from 2% in Arkansas to 40% in New Jersey.
“As of early July, with the number of daily confirmed COVID-19 cases per 100K residents surging in states such Arizona, Florida, California and more, certain states are starting to see overall non-comprehensive appraisal counts trend down again,” CCC said in a report written by Bethany Suckrow. “How far they fall will likely depend on how extensive efforts to contain the virus become.”
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July 29, 2020 at 11:38PM
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