Rising auto costs

James Lynch, I.I.I. chief actuary, presented on March 21, 2018 to the Casualty Actuarial Society Ratemaking, Product and Modeling Seminar in Chicago, IL. This PowerPoint report discusses how the rising frequency and severity in auto losses is “pinching” the largest P/C line. The report explains that from 2015 to 2017, the cost of accidents has risen dramatically. While the frequency spike has lessened, severity is now the problem. People are driving more, which results in more collisions and repairs. Also, as the economy has improved, consumers are purchasing more sophisticated automobiles, which in turn, are costlier to repair. In addition, there were 40,000 deaths from auto in 2016 and 2017, with injury severity typically exceeding medical CPI. The report also discusses the legalization and decriminalization of marijuana nationwide.