Auto Severity is a Problem
Sunday, June 3rd, 2001 AutoA glance at the graph on this page indicates quite disparate trends between severity (average size of claims) and frequency (average number of claims per exposure unit) in the personal auto line for 2000. While frequency is down for the five coverages, severity is up in all cases, led by a horrifying 17.4 percent increase in personal injury protection. This pattern of flat-to-down frequency versus sharply rising severity is not limited to auto insurance. In other lines, such as general liability and commercial property, there is considerable anecdotal evidence of the same problem. What are the underlying factors leading to a veritable explosion of severity? The first culprit is medical care, affecting both personal auto and commercial liability coverages.
