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Amid inflation and labor shortages, the growing impact of electric vehicles (EVs) and rising repair costs, insurers and repairers will have a bumpy road to navigate in the year ahead, according to CCC Intelligent Solutions Inc.’s Crash Course Q3 2024 Report.

The quarterly report 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 customers using the cloud platform provider’s product.

According to the latest report, the total cost of repair (TCOR) increased by 3.7 percent in the first half of 2024 compared to the same period in 2023, driven primarily by labor and parts costs.

Labor rates rose by 4.9 percent year-over-year, placing additional financial strain on repair shops and insurers.

The growing complexity of vehicles, particularly with the increased adoption of EVs, is resulting in more parts and labor hours per repair, CCC stated.

EVs now represent 2.4 percent of all repairable claims in the first half of 2024, up from 1.6 percent in the same period in 2023, the data showed.

EV repairs remain more expensive than non-EVs, with the average repair cost for an EV 46.9 percent higher than that of a non-EV.

Labor accounts for 43.3 percent of total EV repair costs in vehicles three years or newer, compared to 36.5 percent for non-EVs.

Persistent inflation is continuing to drive up industry costs, particularly in casualty claims.

Third-party medical bill line severity has risen by 5.4 percent and first-party medical bill line severity has increased 6.1 percent since the first half of 2023.

Uninsured and underinsured motorist injury claim submissions have also increased significantly along with insurance premiums for consumers, the report found.

CCC data revealed a 1.8 percent year-over-year increase in vehicles flagged by carriers as total losses in 2024, primarily due to the continued erosion of used vehicle values and a maturing vehicle pool, with 73 percent of valuations are for vehicles seven years or older, reflecting the aging nature of the U.S. car fleet.

“2025 will present unique challenges and opportunities for the auto claims and repair industries,” said Kyle Krumlauf, director of industry analytics at CCC and co-author of Crash Course. “From rising repair costs and labor shortages to the growing complexity of vehicles and supply chain disruptions, staying ahead of these trends is critical to the industry’s viability. Our Q3 report provides key insights and strategies the industry can use to overcome these challenges and succeed in an increasingly competitive market.”

Previously published annually, Crash Course is being released quarterly in 2024 to provide more frequent updates on key trends and insights.

Topics Trends Carriers Auto InsurTech Tech