CCC Crash Course Report Reveals How Labor Pressures and Increasing Vehicle Complexity Are Reshaping Auto Insurance and Collision Repair Industries
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Insights
The auto claims and collision repair industries are undergoing significant changes due to the rapid tech transformation within the automotive sector. The shift towards more complex vehicles equipped with advanced driver assistance systems (ADAS) and the rise of electric vehicles (EVs) are notable trends that have a direct impact on repair costs and cycle times. As vehicles integrate more sophisticated technology, the cost of repairs increases, not only due to the expensive components but also because of the specialized labor required for these tasks. This is particularly evident in the 35% cost differential for repairing newer versus older model vehicles over the past decade.
Moreover, changes in consumer behavior, such as the preference for replacing parts over repairing them, are leading to higher costs for consumers and altering the demand for skills within the repair industry. These trends are critical for stakeholders in the insurance and automotive repair sectors, as they must adapt their pricing models and skill sets to remain competitive. The growing adoption of AI and automation tools is a strategic response to these challenges, aiming to improve efficiency and mitigate the impacts of labor shortages.
The insurance industry is facing pressures from several fronts, as highlighted by the CCC report. The increase in vehicle complexity and associated repair costs is leading to higher claims costs, which may result in upward pressure on premiums. Insurers are also contending with longer cycle times for repairs due to scheduling backlogs, a 60% increase compared to pre-pandemic times, which can affect customer satisfaction and operational efficiency.
Another concern for insurers is the high turnover among adjusters, which complicates subrogation efforts and can lead to decreased referrals. This turnover challenges revenue and cost reduction strategies, requiring companies to invest in training and retaining skilled personnel. The report also notes the impact of severe weather events and urbanization on property losses, which insurers must factor into their risk assessments and pricing strategies. The increase in medical bill costs, particularly for high-dollar procedures, is another factor contributing to the rising severity of claims.
The CCC report sheds light on the transformation of the automotive industry, with a particular focus on the rise of electric vehicles (EVs). EVs are not only becoming more common in repair assessments but also show different cost and total loss patterns compared to non-EVs. Despite their higher repair costs, EVs are totaled less often, which may indicate a shift in valuation trends that stakeholders need to understand.
The report also underscores the emerging 'replace vs. repair' trend, which has implications for manufacturing and supply chain strategies. Automotive manufacturers and suppliers may need to adjust their production and inventory strategies to accommodate the increasing preference for new parts. This trend could also influence the design of vehicles, with manufacturers potentially seeking to simplify repair processes or make parts more easily replaceable to manage repair costs.
The now quarterly report identifies macro trends, business drivers, and technologies impacting consumer driving, vehicle ownership, automotive claims, and collision repair
CCC Crash Course Q1 2024 Report - by the numbers (Photo: Business Wire)
The report, now on a quarterly schedule, is based on information derived from 300 million claims-related transactions and millions of bodily injury and personal injury protection (PIP) /medical payments (MedPay) casualty claims processed by CCC’s customers using the company’s solutions.
Crash Course Q1 2024 found that increasing vehicle complexity, combined with rising labor costs and shortages, are placing persistent pressure on carriers and repairers. New findings show that while vehicles may be safer, more capable of avoiding crashes, and more environmentally friendly, advanced technology is contributing to costlier repairs, higher claims costs, and longer cycle times. Additional factors, such as scheduling backlogs, have contributed to the
“Much of what the industry is experiencing is reflective of a new normal where complexity, beginning with the vehicle itself, is reshaping the market landscape,” said Kyle Krumlauf, director, Industry Analytics at CCC and co-author of Crash Course. “CCC has shifted to a quarterly publication of Crash Course to support the growing needs of our customers and the industry. This change allows us to provide more data and insights more frequently, helping industry participants anticipate challenges and be better equipped for the road ahead."
Key findings of Crash Course: Q1 2024 include:
- Auto Tech Transformation: The report identifies key challenges faced by the auto claims and collision repair industries in keeping pace with the industry’s tech transformation, such as increased costs associated with repairing advanced driver assistance systems (ADAS) and other technology.
- Electric Vehicle (EV) Repairs: EVs are becoming more common in repair assessments. Despite their youth, EV repairs carry higher costs, especially in labor. Longer repair times are common due to capacity constraints and detailed repair procedures. EVs are totaled less often than non-EVs, reflecting changing valuation trends.
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Replace vs. Repair: An emerging “replace vs. repair” trend, a preference for replacing parts instead of repairing them, demands different skill sets for the repair industry leading to higher costs for consumers. Over the past decade, the cost differential for repairing older versus newer model year vehicles has grown by
35% . - Urbanization and Weather: Acknowledging the impact of growing urbanization and volatile weather patterns as a constant catalyst for losses, the report confirms increases in property losses from severe weather events.
- Subrogation: High turnover among adjusters is hindering subrogation efforts, leading to decreased referrals, and complicating revenue and cost reduction strategies.
- Casualty: Despite decreasing treatment duration and procedure counts for injury claims since the peak in 2021, severity continues to climb due to significant cost increases for medical bills, particularly for high-dollar procedures like radiology and surgery.
- Claims and Repair Technology: Adoption of AI and automation tools to speed and inform functions from estimating to scanning to parts ordering continue to grow as the industry looks to offset the effects of labor shortages and the complexity that comes with today’s more sophisticated vehicles.
In addition to macro trends and topics, Crash Course Q1 2024 also includes industry-level detail on claims frequency and impact severity, medical costs, parts costs, total loss trends and more.
Previously published annually, Crash Course will be published quarterly in 2024 to provide more frequent updates on key trends and insight. The Q1 2024 report is the 29th edition of Crash Course.
Download the full report at cccis.com/reports/crash-course-2024.
About CCC
CCC Intelligent Solutions Inc. (CCC), a subsidiary of CCC Intelligent Solutions Holdings Inc. (NASDAQ: CCCS), is a leading SaaS platform for the multi-trillion-dollar P&C insurance economy powering operations for insurers, repairers, automakers, part suppliers, lenders, and more. CCC cloud technology connects more than 35,000 businesses digitizing mission-critical workflows, commerce, and customer experiences. A trusted leader in AI, IoT, customer experience, network and workflow management, CCC delivers innovations that keep people’s lives moving forward when it matters most. Learn more about CCC at www.cccis.com.
Special Note Regarding Forward-Looking Statements
This press release contains forward-looking statements that are based on beliefs and assumptions and on information currently available. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Forward-looking statements in this press release include, but are not limited to, statements regarding future use and performance of CCC’s digital solutions. We cannot assure you that the forward-looking statements in this press release will prove to be accurate. These forward-looking statements are subject to a number of risks and uncertainties, including, among others, competition, including technological advances and new products marketed by competitors; changes to applicable laws and regulations; and other risks and uncertainties, including those included under the header “Risk Factors” in CCC’s filings with the Securities and Exchange Commission (“SEC”), including the Form 10-K filed February 28, 2024, which can be obtained, without charge, at the SEC’s website (www.sec.gov). The forward-looking statements in this press release represent our views as of the date of this press release. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this press release.
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CCC Media Contact: Michelle Hellyar
mhellyar@cccis.com | 773.791.3675
Source: CCC Intelligent Solutions Inc.
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