A new report out of Chicago, from software and cloud technology firm, CCC Intelligent Solutions Inc., shows labour pressures in the United States and increasing vehicle complexity are reshaping both insurance and collision repair.
In a discussion about macroeconomic trends, business drivers and technologies impacting the industries, the report, entitled 2024 Crash Course Report, found that these pressures (vehicle complexity and rising labour costs and shortages) are putting “persistent” pressure on carriers and the automobile repair industry. “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,” the firm’s researchers write.
Kyle Krumlauf, director, industry analytics with CCC and co-author of the report says “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.”
Electric vehicles
Among the report’s findings, they say electric vehicles (EVs) are showing up more commonly in repair assessments. These repairs are more costly, particularly when it comes to labour. They also say an emerging “replace versus repair” trend, where parts are replaced instead of being repaired, requires different, more costly skills from technicians.
The report also looks in depth at claims frequency, impact severity, medical costs, parts costs and total loss trends in the United States.
“Today’s average passenger vehicles are highly instrumented. They’re safer, more reliable and more comfortable but they’re also more complex, with somewhere between 1,400 and 1,500 semiconductor chips (EVs have nearly double that amount) and roughly 30,000 parts,” the report states. “Complex vehicles are often trickier to underwrite and fix. This leaves the auto claims and collision repair industries struggling to keep up with the auto industry’s tech transformation, which requires not only new levels of technical expertise, but also new industry infrastructure to support it.”