Report: Auto Claims and Repair Becoming More Complex

Auto claims and repair are becoming more complex and evolving with advanced vehicle technology, embedded sensors, calibrations, diagnostics and labor dynamics, according to a new report.

CCC Intelligent Solutions released its annual report for 2026. Although the year in review looks stable at a glance, the structure of auto insurance risk is changing, including consumers downgrading full coverage insurance to liability, the report notes.

“The share of repairable appraisals now that include a calibration increase by 6.5% in the fourth quarter alone is now like 28.3%,” said Kyle Krumlauf, director of industry analytics at CCC.

The frequency across most physical damage coverages was steady, and there was an improvement in underwriting performance and combined ratios improved following rate actions in previous years, the report shows.

Timothy Davis, president of SCA Claims, has been the complexity of auto claims increasingly grow for some time.

“What remains in the claims ecosystem is the more complex files,” Davis said, adding that many claims require advanced technical expertise, including claims related to vandalism, fuel contamination and fraud.

The CCC report cites Bureau of Labor Statistics data showing that affordability pressures continue to influence how consumers get involved in insurance and vehicle ownership, costs have grown by 55.8% in the last eight years.

Several consumer behaviors of impacted major purchasing decisions, insurance coverage and claims volumes to self-pay repairs, including:

35% delayed/canceled the purchase of a home (22%), car (8%) or both (5%)
77% view car insurance as a necessity
24% downgraded or dropped insurance to free up money
One-in-three said they would go without insurance temporarily to free up funds
One-in-five would rather have no insurance coverage than pay increasing monthly premiums
29% canceled or downgraded insurance in the last year. Car insurance was the highest form of insurance canceled or downgraded at 15%, health at 8%, homeowners at 5%, pet at 4% and renters at 4%

“Eight percent of customers have dropped full coverage to liability only and consumers are not filing claims,” said Krumlauf. “A lot of that has to do with the fact that they may not have to, because they have older vehicles, and so there’s just a lot less newer vehicles which have liens on them which are going to have full coverage.”

The CCC report also calls out a J.D. Power claims satisfaction study that found 7% of auto insurance customers say that they have avoided filing a claim due to the fear of an increase in their rates. More than a quarter (26%) of auto insurance customers have $1,000 or more in deductibles, according to the study.

“Between 2025 and 2020 there were 12 million less vehicles that are six years old while you have about 27,000,000 more vehicles that are seven years or older, and the vehicles in operation is up about 14.3 million vehicles,” Krumlauf said.

Lower-severity claims have been increasingly optional consumer, with higher deductibles, coverage downgrades and out-of-pocket repair choices are decreasing the filing of small claims, which is “reshaping the severity mix that remains in the system,” the report states.

Davis views some of the emerging trends as a function of affordability.

“I think that speaks to the economy,” Davis said. “I think when you look at the reduction of claims frequency with light claims, that’s because people are taking higher deductibles and it really speaks to the affordability crisis that consumers in America are dealing with right now.”

The P/C insurance industry’s combined ratio improved to 96.1% in 2025, while personal auto improved to 94.4%, a 17.8% decrease from 2022 and a 10.5% decrease from 2023, according to the report.

Comprehensive volumes, first-party coverage the includes fire, theft, vandalism, flood, hail, animal strikes, falling objects and glass-related claims, fell by 16.1% in 2025. That accounted for nearly 40% of the overall volume variance, the report shows.

Drivable vehicle claims flagged as total losses has been increasing since 2021. Drivable claims saw an increase of 3.5%, and drivable total losses were at a 4.2% increase. Bodily injury paid claim frequency increased (11% over the last two years, with property damage liability claims decreasing 7.6% during the same period, according to the report.

The social inflation index rose from 4.4% in 2022 to 6.3% in 2023, suggesting that post-COVID affordability pressures, healthcare cost inflation, litigation intensity and evolving jury behavior played a part in the landscape of liability, the report shows.

The report also cites research from the Insurance Research Council showing the combined population of uninsured and underinsured people on U.S. roadways was 33.4% in 2023, a 10% increase since 2017.

“Insurance inflation has outpaced normal inflation and the amount of rate that was taken in recent years,” Davis said.

Method of inspection among repairable claims continues to shift to direct repair program and photo-estimating solutions, with DRP accounting for 46.7% and photo representing 26.4% of inspections in 2025.

Average repair costs are continuing to rise, primarily due to the increase in total part dollars and other miscellaneous costs with include items like diagnostics. In 2025, the average repair costs was between $4,500 and $5,000 compared to an average of almost $2,500 in 2010, according to the report.

Martinez is Claims Journal intern who is working on his bachelor’s degree in journalism at California State University, Long Beach. He expects to graduate in the Spring.

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