Tag Archives: Insurance Research Council

U.S. Drivers Spent $13 Billion in One Year to Protect Against Uninsured and Underinsured Drivers: IRC Report

One in eight drivers on U.S. roads was without auto insurance in 2019, according to a report released today by the Insurance Research Council (IRC).

At-fault drivers who don’t comply with state insurance requirements raise insurance costs for everyone else. Insured drivers paid more than $13 billion in 2016 (about $78 per insured vehicle) for protection against at-fault drivers who have inadequate coverage for medical costs and property damage they inflict on others.

“Keeping auto insurance affordable is more difficult when a significant number of drivers refuse to carry their fair share of the costs,” said David Corum, vice president of the IRC.

While countrywide the uninsured motorist rate was 12.6 percent in 2019, these rates varied substantially across states, ranging from 3.1 percent in New Jersey to 29.4 percent in Mississippi.

Although the uninsured motorist rate increased only 1.2 percentage points nationwide from 2015-2019, several states experienced more significant increases, including Washington (6.9 percentage points), Rhode Island (6.8 percentage points) and Mississippi (6.4 percentage points). Other states experienced decreases in uninsured motorist rates, including Michigan (10.1 percentage points) and Delaware (2.9 percentage points).

The IRC report, Uninsured Motorists, 2021 Edition, examines data collected from 11 insurers representing 60 percent of the private passenger auto insurance market in 2019. For more information on the study’s methodology and findings, contact David Corum, at (484) 831-9046, or by e-mail at IRC@TheInstitutes.org. For more information about the report, visit the IRC’s Web site at www.insurance-research.org.

Auto damage claims growing twice as fast as inflation: IRC Study

The average payment for auto physical damage insurance claims increased at more than double the rate of inflation from 2010 through 2018, according to a new study from the Insurance Research Council (IRC).

The study, Patterns in Auto Physical Damage Insurance Claims, found that average payments increased 3.7 percent annualized during the study period, while the overall Consumer Price Index (CPI), as well as the CPI for motor vehicle maintenance and repair, grew 1.8 percent annualized.

“Damage to vehicles accounts for a growing share of the costs of paying auto insurance claims,” said David Corum, CPCU, vice president of the IRC. “As vehicle technology continues to evolve, an understanding of the cost drivers behind auto physical damage claims will be important in addressing issues in auto insurance availability and affordability.”

Other findings from the study:

  • Total losses have become more common and more expensive.
  • Catastrophe claims accounted for about one in five dollars paid for comprehensive claims.
  • Deductibles and policy limits have not kept pace with the growth in payments.
  • Physical damage claims have become less likely to have associated injury claims.
  • The rate of attorney involvement is lower in physical damage claims than in auto injury claims.
  • For most aspects of physical damage claims, there are significant differences among states.

According to National Association of Insurance Commissioners (NAIC) data, vehicle damage claims accounted for 60 percent of incurred personal auto losses in 2016, even as the injury cost index – a measure of injury costs relative to physical damage liability claims – declined. Enhanced passenger protections have contributed to a drop in the frequency of injury claims relative to the number of accidents, underscoring an important reality: auto safety improvements are effective but add to the cost of claims, as they lead to more expensive repairs when accidents happen.

With auto claims costs greatly outpacing inflation, it’s worth noting that – as Triple-I previously reported – auto insurance premium growth has trailed CPI growth, particularly since the COVID-19 pandemic and its subsequent economic downturn has led to insurers giving back $14 billion to policyholders in the form of refunds, premium reductions, and dividends.

The study presents findings from a collection of more than 220,000 claims closed with payment under the three principal private passenger auto physical damage coverages in claim years 2010, 2014, and 2018.

For more information on the study’s methodology and findings, contact David Corum at (484) 831-9046 or by email at IRC@TheInstitutes.org.

Too few understand hurricane deductibles

What are hurricane deductibles and how do they work?

Homeowners in New Jersey, North Carolina, South Carolina, Florida and Texas were asked this question in an online survey conducted on behalf of the Insurance Research Council (IRC).

Not only did one-third of respondents say they had never heard of these deductibles or were not sure what they were, one quarter of them lacked an understanding of deductibles in general, the IRC poll found.

From the Insurance Information Institute: “Deductibles have been an essential part of the insurance contract for many years and represent a sharing of the risk between the insurance company and the policyholder. When repairing your home or replacing personal possessions, the amount of the deductible would come out of your own pocket.”

Hurricane deductibles demystified by the InsuringFlorida blog here: “You have two deductibles on your homeowners insurance: one is for hurricanes and the other is for everything else. The “everything else” deductible is for things like a fire, lightning strike or water damage, to name a few. It is usually a flat dollar amount, such as $1,000. The hurricane deductible is, obviously, for hurricanes – and for homes valued over $100,000, it starts at 2 percent of what the home is insured for, which is what it would cost to rebuild it. So, if the house is insured for $250,000, a 2 percent deductible would be $5,000.”

More on hurricane and named storm deductibles from the National Association of Insurance Commissioners (NAIC) website.