COVID-19’s Impact on Claims Volumes

In June 2020, the CLM released the results of a study that examined claims volume changes related to COVID-19 shutdowns that began earlier this year.

More than 70 claims executives participated in this initiative by sharing their organization’s volume changes between early March and the end of May. Participants represented many types of property and casualty claims organizations, including both large and small insurance carriers, third party administrators, and others. Almost all lines of business were represented.

The findings affirmed that the industry has experienced a dramatic decrease in claims volume across many lines of business—with one exception.

Personal Lines Auto

Decreases in personal lines auto were experienced by the highest number of executives who manage that line of business. Ninety-six percent of executives reported a decrease in auto physical damage, with an average decrease in volume of 33 percent. A full 97 percent of executives reported a decrease in personal lines auto liability, with an average volume decrease of 30 percent.

Personal Lines Property

Fewer executives (39 percent) reported a decrease in personal lines property claims, with an average volume decrease of 24 percent. However, for another 30 percent, personal lines property claims increased by an average of 22 percent. In the personal property liability arena, 50 percent of respondents reported a decrease in volume, with an average volume decline of 30 percent.

Commercial Vehicle

A full 83 percent of executives reported a decrease in volume in commercial vehicle claims, with an average decrease of 27 percent. Even more executives (86 percent) reported a volume decrease in commercial vehicle liability claims, and a significant average decline of 31 percent.

Commercial Specialty Liability

In commercial specialty, which includes errors and omissions, directors and officers, professional liability, environmental, employment, and other lines, only 26 percent of executives reported a decrease, with an average decline of just 16 percent.

Workers Compensation

A total of 68 percent of respondents reported a decline in workers compensation claims, with an average decline of 28 percent. However, for another five percent of executives, workers compensation rose, in many cases related to their coverage of first responders and health care workers.

Commercial Property Liability

Fifty-nine percent of those writing commercial property liability risks reported a decrease in claims volume, with an average decline of 26 percent. However, 11 percent reported an average increase of 51 percent.

Commercial Property

The only line of business in which more executives reported an increase was in commercial property. Sixty-six percent reported an increase in volume, with an average increase of 94 percent. However, this high average was driven by several organizations reporting 100 percent-plus increases. The median increase was a much-lower 38 percent.

We are cautious about attributing this increase entirely to pandemic-related claims for business interruption; however, numerous comments from study participants that indicated all catastrophe-related volume had been excluded from their responses suggest that the increase may be COVID-19-related.

A View of the Future

The study also offered participants an opportunity to briefly share their views of the future in terms of what they are expecting in claims volume over the near-term future, which yielded intersting insights.

Several executives predicted a 10-20 percent overall decline through the end of 2020. Another estimated that claims volumes would be within 10 percent of normal by the end of August. Yet another saw a return to almost normal volume levels by the end of May 2020.

While perspectives differed widely, the one item all executives seemed to agree on is that the uncertain nature of COVID-19 and its progression makes it extremely difficult to estimate future volume with any precision. To obtain a full copy of this report, including all comments, go to www.suite200solutions.com/studies.