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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)

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, 2003-2007 (1)

($000)

  2003 2004 2005 2006 2007
Private passenger liability $56,713,153 $56,317,831 $57,188,070 $56,042,440 $59,776,204
Private passenger physical damage 35,414,529 34,239,353 36,762,455 36,151,909 37,523,529
Commercial auto liability 10,666,889 10,809,661 10,373,070 10,746,525 10,091,916
Commercial auto physical damage 3,365,218 3,355,650 3,508,189 3,583,772 3,523,621
Total $106,159,789 $104,722,495 $107,831,784 $106,524,646 $110,915,270
(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 Revenue Dollar Goes, 2007

WHERE THE REVENUE DOLLAR GOES, 2007

(Premiums and investments)

WHERE THE PREMIUM DOLLAR GOES,PRIVATE PASSENGER AUTO INSURANCE, 2007

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 2    
    Subtotal   $29  
       
Payments for damage to cars (1):      
Property damage liability $17    
Collision claims 16    
Comprehensive claims 7    
Costs of settling claims 1    
     Subtotal   $41  
Total claims   $70  
       
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     $96
       
BOTTOM LINE:      
Investment gain (2)     $9
Pretax income ($100 - $96 + $9)     13
Tax     -5
Income after taxes     $8

(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.