III - AUTO REPAIR INDUSTRY

CONTRIBUTION TO SELECTED INDUSTRIES

THE INSURANCE INDUSTRY’S CONTRIBUTION TO THE AUTO REPAIR INDUSTRY

Payments for damage to cars accounted for 60 percent of auto claims payments in 2004. The primary recipients of auto insurance claim payments are auto repair and auto body shops and window glass installers. Others include new and used car dealers, tire dealers and manufacturers of the parts required for vehicle repair and restoration. Depending on the insurance coverage purchased, insurers pay for medical care and rehabilitation if the claimants have been injured. When there are disagreements over liability or the settlement offer, insurers pay for legal costs.

AUTOMOTIVE REPAIR AND MAINTENANCE INDUSTRY, 1997 AND 2002

	1997	2002
Number of establishments	164,360	166,821
Receipts/revenues ($000)	$62,200,597	$75,219,140
Annual payroll ($000)	$16,865,209	$21,592,456
Number of employees	815,149	871,040
Source: U.S. Department of Commerce, Bureau of the Census.

PRIVATE PASSENGER CARS INSURED, 2000-2004 (1)

Year	Total
2000	159,884,136
2001	164,580,088
2002	168,846,307
2003	173,146,793
2004	175,918,548
(1) Excludes Texas. Source: Automobile Insurance Plans Service Office.

Collision and comprehensive coverages pay for damage to or theft of a policyholder's car. Additional sums are paid by insurers to repair other vehicles damaged by the policyholder in a crash. This money is paid under the liability portion of the policy, which also covers legal costs.

INCURRED LOSSES FOR AUTO INSURANCE, 2002-2006 (1)

($000)

	2002	2003	2004	2005	2006
Private passenger liability	$58,847,771	$59,888,192	$59,462,599	$60,162,287	$58,001,992
Private passenger physical damage	36,796,195	37,275,789	35,340,643	38,058,732	37,249,977
Commercial auto liability	13,518,027	12,935,514	12,465,305	12,246,997	12,017,532
Commercial auto physical damage	3,900,759	3,623,862	3,615,720	3,865,846	3,903,000
Total	$113,062,752	$113,723,357	$110,884,267	$114,333,862	$111,172,501
(1) Losses occurring within a fixed period, whether or not adjusted or paid during the same period, on a direct basis before reinsurance. Source: National Association of Insurance Commissioners (NAIC) Annual Statement Database, via Highline Data, LLC. Copyrighted information. No portion of this work may be copied or redistributed without the express written permission of Highline Data, LLC.

WHERE THE PREMIUM DOLLAR GOES,
PRIVATE PASSENGER AUTO INSURANCE, 2006

PREMIUMS EARNED:			$100
CLAIMS:
Payments to injured persons:
Medical	$9
Wage loss and other economic payments	2
Pain and suffering and other noneconomic awards	5
Lawyers’ fees	11
Costs of settling claims	1
Subtotal		$28

Payments for damage to cars (1):
Property damage liability	$15
Collision claims	16
Comprehensive claims	7
Costs of settling claims	1
Subtotal		$39
Total claims		$67

EXPENSES:
Commissions and other selling expenses	$17
General expenses (costs of company operations)	6
State premium taxes, licenses and fees	2
Dividends to policyholders	1
Total expenses		$26

Claims and expense total			$93

BOTTOM LINE:
Investment gain (2)			$7
Pretax income ($100 - $93 + $7)			14
Tax			-5
Income after taxes			$9
(1) Includes theft and damage to other property, e.g., road signs. (2) Includes interest, dividends, and realized capital gains. Source: Insurance Information Institute estimate based on data from ISO; National Association of Insurance Commissioners (NAIC) Annual Statement Database, via Highline Data, LLC. Copyrighted information. No portion of this work may be copied or redistributed without the express written permission of Highline Data, LLC.; Insurance Research Council; A.M. Best Company, Inc.

In 2006 claims accounted for $67 of every $100 earned in private passenger auto insurance premiums in the United States.
Lawyers’ fees accounted for $11 out of every $100 in premiums. Half of the fees went to plaintiffs’ attorneys and the remainder to defendants’ attorneys.
Theft accounted for about 25 percent of the dollars that go to pay comprehensive claims, or 2 percent of premiums earned for private passenger auto insurance.