Auto Insurance Industry Sees More Car Accidents. Confirms Increase in Traffic Accidents Reported by USDOT.
Allstate Corporation held a Special Topic Investor Call on March 17, 2022 to address the recent upward trend in auto accidents.
The U.S. Department of Transportation’s (USDOT) National Highway Traffic Safety Administration today released the Early Estimate of Motor Vehicle Traffic Fatalities for the First Half (January-June) of 2021, which shows the largest six-month increase ever recorded in the Fatality Analysis Reporting System’s history. An estimated 20,160 people died in motor vehicle crashes in the first half of 2021, up 18.4% over 2020. That’s the largest number of projected fatalities in that time period since 2006. Full Press Release – October 28, 2021.
The main topic was the rise in car insurance rates to offset the increase in the “loss ratio” since the height of the Covid Lockdown in the second quarter 2020.
The loss ratio is the total losses incurred in claims divided by premiums earned.
Not Just Inflation
Part of the higher ratio is due to the effect of higher costs to replace vehicles or repair them. That is, if a car needs a new bumper, the price may have risen from $600 to $720. All else being equal (the premium remains at $1,000 for example) the loss ratio increases.
The Non-inflationary factors mentioned are:
- Increase in the number of collisions.
- More severe injuries.
