© 2016 Amica Mutual Company, Lincoln, Rhode Island. All Rights Reserved.

The Amica name, logo and all related names, logos, product and service names, designs and slogans are trademarks 

of the Company or its affiliates or licensors. You must not use such marks without prior written permission from Amica.

Emerging Cost Drivers

in Auto Insurance

Federal Advisory Committee on Insurance

January 5, 2017
Source: Lifehack Quotes
6%

11%

0%

2%

4%

6%

8%

10%

12%

DPW Direct Losses

Changes 2015 Q1 ‒ 2016 Q2

PP Auto Liability

Perception 

vs. Reality

Source: PCI; SNL Financial

Perception: 70% of consumers 

think auto accidents are declining

Reality:
Strong correlations

• Traffic congestion

• Alcohol, speeding, distracted driving

• Miles driven/employment

Other frequency factors

• More older and younger drivers

• Weather/road conditions

• Use of marijuana and opioids

Other severity factors

• Vehicle technology

• Medical costs

• Speed limits

Multitude of 

Factors ‒ 

Economy, 

Society and 

Technology
Economy
2

4

6

8

10

12

14

16

18

Jan

00

Jan

01

Jan

02

Jan

03

Jan

04

Jan

05

Jan

06

Jan

07

Jan

08

Jan

09

Jan

10

Jan

11

Jan

12

Jan

13

Jan

14

Jan15Jan16

"Headline" Unemployment Rate U-3

Unemployment + Underemployment

Rate U-6

Unemployment and Underemployment Rates

Source: US Bureau of Labor Statistics; Insurance Information Institute.

Unemployment 

was 4.9% in 

August 2016. 4.5% 

to 5.5% is 

“normal.”

U-6 was 9.7% in 

August 2016.

U-6 went from 8.0% in March 

2007 to 17.5% in October 2009

For U-6, 8.0% to 

9.5% is “normal.”

18%

16%

14%

12%

10%

8%

6%

4%

2%
110

112

114

116

118

120

122

124

2003.12003.22003.32003.42004.12004.22004.32004.42005.12005.22005.32005.42006.12006.22006.32006.42007.12007.22007.32007.42008.12008.22008.32008.42009.12009.22009.32009.42010.12010.22010.32010.42011.12011.22011.32011.42012.12012.22012.32012.42013.12013.22013.32013.42014.12014.22014.32014.42015.12015.22015.32015.42016.12016.2

24.0

24.5

25.0

25.5

26.0

26.5

27.0

27.5

28.0

28.5

Full-time Part-time

Full-time vs. Part-time Employment 2003-2016

Data are seasonally-adjusted. Sources: US Bureau of Labor Statistics; US Department of Labor; Insurance Information Institute.

Full time, 

millions

Part-time, 

millions

Recession shifted 

employment growth from 

full-time to part-time

Pre-recession, 

most new jobs 

were full-time

New full-time peak
0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

Mar-07

Jun-07

Sep-07

Dec-07

Mar-08

Jun-08

Sep-08

Dec-08

Mar-09

Jun-09

Sep-09

Dec-09

Mar-10

Jun-10

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Dec-11

Mar-12

Jun-12

Sep-12

Dec-12

Mar-13

Jun-13

Sep-13

Dec-13

Mar-14

Jun-14

Sep-14

Dec-14

Mar-15

Jun-15

Sep-15

Dec-15

Mar-16

Jun-16

Job switchers Job stayers Core PCE

Wages Have Risen Faster Than Inflation

*Seasonally adjusted; year-over-year; Shaded area indicates recession.

Sources: NBER (recessions); https://www.frbatlanta.org/chcs/wage-growth-tracker.aspx?panel=1 ; I.I.I.

Y-o-Y Change Wage growth 

accelerating

The Fed raised rates for 

the first time in 7 years
Vehicle Sales Show Continued Strength

Source: Edmunds.com, Automotive News

Copyright 2016 CCC Information Services Inc. Confidential & Proprietary All Rights Reserved

36.91 36.92 37.58 35.83 36.24 38.28 40.58

11.58 12.77 14.49 15.60 16.53 17.47 17.6

0

10

20

30

40

50

60

70

CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 CY2016E

In Millions

U.S. Light Vehicle Sales CY 2010 to CY 2016E

Used New
Gasoline Prices, Miles Driven and Claim Frequency

-35

-25

-15

-5

5

15

25

35

'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 3

Qtrs.

Gasoline Price Claim Freq. Miles Driven '15*

Low crude 

oil prices; 

oversupply 

of 

gasoline.

Annual Change

Claim frequency fell in 1997-1998, 2001-2002 and 2009 despite lower gasoline prices. * Last data point: Changes in claim frequency and miles 

driven reflect first 3 qtrs. of 2014 to first 3 qtrs. of 2015. Change in gasoline prices reflects 2014 to 2015 (entire years). Source: FHWA; PCI

Stronger 

dollar; 

oil prices 

dropped.

More fuelefficient cars; 

boom in North 

American 

crude oil.

Falloff in consumer 

demand after 9/11; 

oversupply of 

gasoline. 

35%

25%

15%

5%

-5%

-15%

-25%

-35%
138

140

142

144

146

148

150

152

06:Q106:Q307:Q107:Q308:Q108:Q309:Q109:Q310:Q110:Q311:Q111:Q312:Q112:Q313:Q113:Q3

14:Q114:Q315:Q115:Q316:Q1

5.5

5.6

5.7

5.8

5.9

Number Employed (left scale) Collision Claim Frequency (right scale) 6.0

More People Working and Driving ‒ More Collisions

Source: Insurance Information Institute Analysis of Seasonally Adjusted Employed from Bureau of Labor Statistics; Rolling Four-Qtr Avg. Frequency from Insurance Services Office.

Number 

Employed,

Millions

Overall Collision 

Claims Per 100 

Insured Vehicles
States with Highest and Lowest Vehicle Damage Frequency Changes

Highest Frequency Change

Lowest Frequency Change

Source: PCI; Society of Actuaries using PPA Fast Track Monitoring System data

7.3% 14.0%, DC

5.9%, MD

-11.3%

-9.7%

-6.5%

-4.7%

-10.7%

-4.2%

-9.3%

6.7% 9.4%

9.7%

7.9%

9.1%

6.2%

6.1%

5.7%

-7.0%, VT -5.4%

-4.8%, NH
More Miles Traveled in States With 

Higher Claim Frequency Growth

Source: PCI; Federal Highway Association (FHWA)

3.7%

6.8%

2.7%

3.6%

0

1

2

3

4

5

6

7

8

Urban Miles Rural Miles

Highest Group Lowest Group

Note: Percent changes represent increases from YE Dec. 2014 to YE Dec. 2015.
16.9% 17.2%

17.7% 17.9%

17.5% 17.4% 17.4% 17.6% 17.8%

18.8%

16.1% 16.1% 16.0% 15.9%

16.8%

17.9%

CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 MidYr

2011

MidYr

2012

MidYr

2013

MidYr

2014

MidYr

2015

MidYr

2016

Non-Comprehensive Losses Total Loss Share of Claim Count

Total Loss Frequency Rises

Source: CCC Information Services Inc. Copyright 2016 CCC Information Services Inc. Confidential & Proprietary All Rights Reserved
Severity Trends

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

2013 2014 2015(1) 2015(2) 2015(3)

Claim Freq. Claim Severity Loss Cost

7.2% 

Change

7.0% 

Change

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

2013 2014 2015(1) 2015(2) 2015(3)

Claim Freq. Claim Severity Loss Cost

8.0% 

Change

Change 

since 2013 Highest Freq. Changes Change Lowest Freq. Changes

since 2013 14.7% 

Change

-1.9% 

Change

6.0% 

Change

Data points reflect year-end, rolling 4 quarters, vehicle damage coverages. Source: PCI; PPA Fast Track Monitoring System, ISS, NISS and ISO
Claim Frequency and Severity Affect Loss Cost

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2013 2014 2015 2016YE2Q

Claim Frequency Claim Severity Loss Cost

11.8% 

increase

Since 2013:

16.8% 

increase

4.4% 

increase

Change 

since 2013

Vehicle Damage = PD Liability + Collision coverages.

Data points reflect year-end, and combined rolling four quarters for 2016(2Q).

Source: PCI; PPA Fast Track Monitoring System, ISS, NISS and ISO
Auto Medical Increasing + Worse Than Medical CPI

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

2013 2014 2015

Auto Injury Severity and Medical Cost CPI Indices

Med CPI BI Sev PIP Sev

7.3%

6.7%

5.1%

Source: PCI using

1. Auto: PPA Fast Track Monitoring System, ISS, NISS and ISO

2. Medical CPI: Bureau of Labor Statistics

Change since 2013
2015

• 8% increased in auto deaths

• 4% increased death rate per mile

2016 through June

• 10% increased auto deaths

• 6% increased death rate per mile

Auto Deaths/Injuries Increasing
-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Rise in Auto Deaths

Annual Percent Change

Source: PCI; NHTSA
0

5

10

15

20

25

30

2009 2010 2011 2012 2013 2014 2015

Rise in Auto Injuries

Auto injuries up 26% since 2009

Source: PCI; National Safety Council, Medically consulted auto injuries, indexed by PCI

30%

25%

20%

15%

10%

5%

0%
Higher Speed Limits Problematic

8%

increase in fatality rates on interstates 

and freeways for every 5 mph increase 

in maximum state speed limits

4%

increase on other roads

Source: Bergal, Jenni. “Rising Speed Limits Spur Safety Concerns.” April 20, 2015. The Pew 

Charitable Trusts. Copyright 2016 CCC Information Services Inc. Confidential & Proprietary 

All Rights Reserved
Speed Limit Impact on Traffic Deaths

20

40

60

80

100

‘12 ‘13 ‘14 ‘10 ‘12 ‘13 ‘14

No. of SpeedRelated DeathsUT changes, 

eff. 2013 and 

2014

WY 

change, 

eff. 2014

‘10 ‘11 ‘11

UTAH WYOMING
Speed Limit Impact on Severity

0

2

4

6

8

10

States w/Same

Limits

States that Raised

Speed Limits

Vehicle Damage Claim Severity

2013-2015

Note: States that raised their speed limits since 2013 are AK, GA, ID, IL, KY, ME, NH, NC, OH, PA, SD, UT and WY. Those that changed in 2015 are not 

included since their new limits have been in effect for only a short time. 

States with same limits did not make any changes during 2011-2015. 

0

2

4

6

8

10

States w/Same

Limits

States that Raised

Speed Limits

Injury Claim Severity

2013-2015
Society
Safety Awareness Poll

70% of Americans think car safety technology has reduced the 

number of motor vehicle accidents, but in reality auto 

accidents are increasing.

of Americans think that distracted driving is contributing 

to more motor vehicle accidents than driving under the 

influence of alcohol.

85%

of Americans agree that distracted walking is a major, 90% emerging problem.
Cellphone Use Declines ‒ Texting and Emailing Grows

Source: U.S. DOT, National Traffic Safety Administration. “Driver Electronic Device Use in 2014.” Traffic Safety Facts Research Note DOT HS 812 197, 

September 2015. Copyright 2016 CCC Information Services Inc. Confidential & Proprietary All Rights Reserved

0%

1%

2%

3%

4%

5%

6%

7%

Hand-held Cellphone Use Visible Manipulation of

Hand-Held Devices - All

Ages

Visible Manipulation of

Hand-Held Devices - Ages

16 to 24

Visible Manipulation of

Hand-Held Devices - Ages

25 to 69

CY05 CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14
What We Say vs. What We Do

AAA True Motion

Text 42% 71%

Phone 66% 92%

Reported Estimated

Crashes 6.3 m 17-29 m
Top 10 Distracted Driving Apps

1. Google Maps

2. Pokemon Go

3. Android Messaging

4. Facebook

5. YouTube

Source: True Motion

6. Waze

7. Amazon Music

8. Chrome

9. Pandora

10.Netflix
Distracted Walking – A Rising Risk

Source: Consumer Product Safety Commission/WSJ Research | WSJ.com

0

500

1000

1500

2000

2500

3000

2006 2008 2010 2012 2014

Emergency room visits
Colorado Traffic Deaths Related to Marijuana*

37 39

43 47 49

63

78

71

94

69

0

10

20

30

40

50

60

70

80

90

100

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Number of Deaths

Legalization

Commercialization

*Number of Fatalities Involving Operators Testing Positive for Marijuana

Source: National Highway Traffic Safety Administration, Fatality Analysis Reporting System (FARS), 2006-2013 and 

CDOT/RMHIDTA 2014, 2015
Marijuana in Colorado

0

200

400

600

800

1,000

1,200

McDonald's Starbucks Marijuana

Dispensaries 2015

Marijuana

Dispensaries 2016

Source: Colorado State Highway Patrol, March 2015; 2016 marijuana dispensaries: Colorado Dept. of Revenue
Technology
Standard Options on a Base F-150 Pickup, 1985-2015

Source: CCC Information Services Inc. Copyright 2016 CCC Information Services Inc. Confidential & Proprietary All Rights Reserved

• Standard options have changed 

over 30 years

• Many options now required 

by NHTSA
Not Your Father’s Oldsmobile

Copyright © 2016 by the Property Casualty Insurers Association of America | www.pciaa.net
Safety Systems

E-Class (213) 

Control Units

Advanced safety 

systems requiring 

more cameras and 

sensors in highimpact areas

Copyright © 2016 by the Property Casualty Insurers 

Association of America | www.pciaa.net
0%

20%

40%

60%

80%

100%

2000 2010 2020 2030 2040 2050

predicted

actual

IIHS/HLDI Registered Vehicles With Front-Crash Prevention

Source: IIHS Copyright 2016 CCC Information Services Inc. Confidential & Proprietary All Rights Reserved
Summary

• Economy and gas price levels will continue to 

produce heightened miles driven per vehicle

• New vehicle sales placing more costly complex 

cars in the market

• Technology in vehicles points to longer-term fewer 

but more expensive repairs

• Medical cost inflation will continue
Policy Recommendations

• Laws/enforcement against distracted driving

• Robust drunk/drugged driving limits

• Responsible speed limits

• Education and awareness

• help the policymakers understand trends

• help the public receive timely and useful information
© 2016 Amica Mutual Company, Lincoln, Rhode Island. All Rights Reserved.

The Amica name, logo and all related names, logos, product and service names, designs and slogans are trademarks 

of the Company or its affiliates or licensors. You must not use such marks without prior written permission from Amica.