Mitchell International, Inc., a provider of information, workflow, and performance management solutions to the property/casualty claims and collision repair industries, has released the first-quarter 2010 edition of its "Industry Trends Report" (ITR), the company's quarterly publication that highlights industry-related trends, news items, and statistics.
This edition's feature article, "Do You Really Know Where Total Losses Are Trending?" by Greg Horn, Mitchell's vice president of industry relations, details Mitchell's examination of the trend of declining total loss claims, a phenomenon occurring despite a severe U.S. economic slowdown that has seen approximately six million fewer cars and trucks sold in 2009 than in previous years.
With the average age of a typical vehicle today at an unprecedented high of nearly 10 years, many would expect total losses to rise correspondingly, particularly since total loss claims are typically declared once the estimated cost of repairs climbs to more than 80 percent of the actual cash value of the vehicle, where most older vehicles fall.
Horn's examination of Mitchell's multiyear claims data breaks down the results and explains the pool of older vehicles carrying first-party coverage is shrinking. Older vehicles on U.S. roads today are increasingly underinsured or not insured at all as cash-strapped drivers reduce or drop their coverage. (The Insurance Research Council notes an all-time high of 16.1 percent of Americans are driving uninsured vehicles in these challenging times, according to Horn.) Therefore, no total loss claim is made by the owners of these vehicles in the event of a collision.
"Tough economic times will likely continue to spur the decrease in total losses that are paid for by collision coverage because the pool of older vehicles that has been so sharply reduced will continue to contract further," says Horn. "In addition to the underinsured phenomenon, there are substantially fewer older cars and trucks available to purchase: The federal Cash for Clunkers program alone took approximately 690,000 older vehicles off the roads, fewer trade-ins are occurring in a time of depressed new car sales, and the lease financing collapse has made fewer cars available from this traditional source of used fleet vehicles."
Complete content is available in the latest "Industry Trends Report," which may be downloaded in PDF format by visiting www.mitchell.com.
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