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Auto Observations

Industry experts discuss the challenges facing the auto insurance market with AMBestTV.
  • October 2019
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“Severity [trends in auto insurance] are straightforward. With severity, we’re seeing a very clear increase in medical costs. We’re seeing a very clear increase in the cost to repair motor vehicles. These costs are outpacing increases in the consumer price index. When it comes to severity, that’s going to continue to rise. In addition to these other macro level indexes, vehicles are becoming more complicated. Every year, there’s more technological advances. These find their way to auto vehicles. When these vehicles get into an accident, it just costs more to repair them. When it comes to severity, we expect that to continue to rise for the foreseeable future.”

Samuel Hanig
Senior Industry Research Analyst
AM Best


“As we know, the larger [auto] insurers are getting really technologically advanced. The use of data in their analysis and pricing. The smaller companies are challenged to keep up, but they can bring other things to the table. Your localized knowledge, your localized experience, maybe some more value-added services, the idea that you know your agent as opposed to you know your computer. Those are some of the things that can keep the smaller auto writers in the game.”

Raymond Thomson
AM Best


“Some new risks that we see as vehicles continue to evolve, for one is the product liability exposure. Traditionally when an accident occurred, most times claims would be administered between the drivers that were involved in the accident, determining fault of the driver. Now other things, other factors come into question. For example, was the vehicle operating in some automated mode, or especially before it gets to the point of being fully autonomous, whether to say no steering wheel, or no brake pedals in play. If there is a way for a driver to assume control, there’s going to be questions around whether product liability should be the insurance coverage for the accident, or whether it’s the owner and the traditional driver’s insurance that should be providing coverage. In addition to that, we also envision new cyberrisks coming into play. You think about vehicles getting hacked. In addition to that, is there electronic data being stored in the vehicle, especially if you think about a commercial vehicle, or business use of the vehicle, what type of data may be in the vehicle. Especially if it’s taxis or on-demand vehicles, if somebody is a passenger in your vehicle, and maybe plugging their device into the vehicle, is there other data that may be transferred or opportunity for viruses to be transferred to a vehicle, and vice versa.”

Sandee Perfetto
Senior Vice President of Public Policy
Florida Association for Insurance Reform

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