40 percent of the total repair cost,” with
labor, paint and other factors contributing to the balance.
Changes in technology (more complex
lighting or cameras in bumpers) and the
materials used in body panels is affecting
replacement costs for newer cars. Vehicles that are seven years or older are less
affected by increasing prices.
7. Auto claim impacts
Today’s vehicles last longer than ever before, and with more new cars and trucks
on the road, fewer are being taken out of
service each year. Add to this the forecast
that the number of vehicles aged 16 years
or older is expected to grow to 30 percent
or 81 million vehicles by 2021 according
to IHS Markit.
How does this affect auto insurance
claims? CCC projects “the industry
would see an increase in newer age ve-
hicle claims where total loss frequency is
lower, but repair costs are higher.” In ad-
dition, a larger number of older vehicles
on the road could mean that more vehi-
cles are totaled when involved in a colli-
sion, further driving up the costs associ-
ated with total loss claims.
8. Negative equity in vehicle
The number of individuals actually purchasing a new vehicle with a trade-in has
dropped from 50 percent in 2012 to 45
percent in the first nine months of 2016,
according to Edmunds.com, while trade-ins for used cars have grown four percent
to 31 percent in 2016.
These trade-ins created negative equity
for the purchasers and could be one of the
reasons so many are taking on longer car
loans. A vehicle with negative equity in-
volved in a total loss claim can be more
difficult to settle since consumers may
not understand the impact of deprecia-
tion on the value of their car. CCC says
that “providing customers with infor-
mation at policy renewal on the present
value of their insured property could po-
tentially help keep them better informed,
and avoid difficult surprises if there was a
total loss claim.”
9. Vehicles as an Io T device
Vehicle technology is rapidly changing
– new safety features, autonomous or
semi-autonomous options, smart phone
connections and other IoT devices are
allowing manufacturers and insurers to
gather more information than ever about
drivers and their habits. On a positive
note, this can identify opportunities for
new products and services. A McKinsey
study “estimates that nearly $1.5 trillion
in additional revenue could be generated
from on-demand mobility and data-driv-
en services by 2030…”
There is the expectation that autono-
-William “Bubba” Ryan, CEO
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