“Cars cost more to repair than they used to” has become a phrase we frequently hear in our industry, as we try to justify the increases in “total loss” frequency as well as rising insurance rates and repair costs. But what, exactly, is driving up these costs? Relying on the Consumer Price Index of Dec. 15, 2015 to calculate the cumulative inflation rate through November 2015 and using the Chevrolet Malibu and Toyota Camry, three major components that drive repair severity were compared: parts, labor, and paint.

The conclusion? Even when adjusted for inflation, new passenger cars do cost more to repair than they did five years ago. Despite multiple variables including the cost of insurance and service hours, the rising cost of parts has had the biggest impact on collision repairs overall.


What does this information mean for Insurers?

As the cost of parts continue to rise, accurate appraisals for bumper repair and replacement will become even more critical. Bumper systems are affected in 72% of all collision repair claims. For this reason, they’re a key driver in overall repair costs and number of operations. By continuing to develop your teams’ expertise on bumper systems, you’ll be able to improve appraisal accuracy in the majority of claims to avoid supplementation and improve customer service overall.

Information in this article taken from A.M. Best Industry Trend Report Q1 2016


If we can help you recover some of these costs with a subrogation recovery program, please contact us!