How could COVID-19 affect the auto insurance industry?

While the health and welfare of people around the world is the most important concern, the outbreak of the coronavirus will no doubt have far-reaching effects on all aspects of our lives, including our driving behaviors. As a result, auto insurers may likely see short- and long-term effects in their claims experience.

In the short term, the auto insurance industry will likely see a sudden and sharp decline in the volume of reported claims due to social distancing and stay-at-home mandates. Whether or not the effects of social distancing will be felt over a prolonged period will be dependent on how quickly the economy recovers once day-to-day life returns to normal. A sluggish economy could have lasting long-term effects on auto claims frequencies.

In this article, Milliman’s Paul Anderson, Eric Krafcheck, and Katherine Pipkorn discuss what auto insurers may be facing in the weeks and months ahead.

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