Claim severity is rising fast. While claim frequency has been more stable, the cost per claim is beginning to strain loss costs. The 2025 SambaSafety Driver Risk Report: Current Trends Shaping Roadway Safety highlights this shift in the insurance market, stating that the average severity of claims has increased between $300 and $800 per claim on newer vehicles.
From the tech advances in commercial vehicles to market shifts in vehicle repair costs, we share why understanding these dynamics is essential for underwriters and claims managers to stay ahead of cost volatility and protect portfolio profitability.
Why Claim Severity Is Rising
A closer look at claim severity reveals that it’s more complex, expensive and increasingly driven by the technology and behaviors shaping the risk landscape. We spoke with Mike Anderson, Industry Consultant and Owner of Collision Advice, who shared what's behind the surge.
1. ADAS Is Changing the Game
The growing complexity of new commercial vehicles, most equipped with Advanced Driver Assistance Systems (ADAS), is one of the more significant contributors to rising severity due to the steep repair costs associated with them. With vehicles housing blind-spot monitors, parking sensors and cameras, repairability can often be limited and lead to higher replacement costs and repair cycle times.
2. Part Prices Are Outpacing Inflation
Vehicle part costs have surged between 3% and 12% in the last two years, with windshields and bumpers seeing the steepest increases. With recent economic volatility, tariffs are expected to compound the cost problem on the $90 billion auto part imports seen each year.
3. Higher Deductibles Shift Severity Curve
Many policyholders have responded to rising insurance premiums by selecting higher deductibles or opting out of certain coverages. As a result, insurers see fewer low-end claims, which can skew data—resulting in an unreliable median or average claim value. This skew can impact actuarial models and lead to misaligned pricing.
4. Speeding Risks Contribute to Severity
The 2025 SambaSafety Driver Risk Report highlights that nearly 40% of all major road violations are caused by speeding. Following the COVID-19 pandemic, driving patterns have shifted. With fewer vehicles on the road during core working hours due to remote work, crashes are occurring at higher speeds and increasing in severity at an alarming rate.
5. More Vehicles Are Declared a “Total Loss”
Insurance companies are now declaring total losses of vehicles at 45% to 50% of their market value, compared to the historical thresholds of 75%. Why the shift?
- Strength in the salvage market: Insurers are receiving high salvage bids from international buyers at auto auctions, making total loss payouts more economical in some cases.
- Operational considerations: Insurers may also declare a total loss at a lower percentage if repair time is projected to be longer, which translates into higher rental vehicle and downtime costs.
And although totaling a vehicle can be more cost-effective, it can also raise total claim payouts.
How Insurers Can Navigate Claim Severity
As claim severity continues to climb and creates uncertainty for commercial auto insurers, there are steps and strategies insurance companies can take to implement a proactive approach to mitigation. While several of the cost drivers, like vehicle tech and parts inflation, are largely outside of insurers' control, there are steps they can take to contain costs, improve outcomes and strive for profitability.
First, refining risk modeling and underwriting practices by leveraging comprehensive data from multiple sources (telematics, motor vehicle records (MVRs) or court records) that allows underwriters to more accurately segment and price risk.
This data and robust claims history can refine actuarial models to better understand and price for trends that can lead to increased severity of claims.
Second, insurers can empower Risk Control to leverage data to identify high-risk drivers and provide policyholders with risk management options like targeted driver training or coaching. Risk Control teams can also encourage fleets to use dashcams to promote safe driving behaviors and provide evidence in the event of a crash.
Finally, insurers can navigate claim severity by optimizing the claims process through early intervention and updated systems or technologies. For example, a modern claims management system can streamline processes and implement a more accurate claim resolution.
With small, actionable steps, a commercial auto insurer can gain better insight into claim severity trends, improve underwriting practices and empower policyholders to promote improve and enforce stronger safety programs.
Address Claim Severity with Data
The challenge of claim severity presents a unique opportunity for commercial auto insurance companies to leverage data and gain visibility into the behaviors or patterns that often contribute to these inflated claims.
At SambaSafety, we specialize in providing insurers and their policyholders with a complete, 360-degree view of data that can empower Underwriting, Risk Control and Drivers to take actionable steps to mitigate risk that can lead to increased claim severity.
Let us help you turn data into your competitive advantage. Download your copy of the 2025 SambaSafety Driver Risk Report to see how current driving trends are shaping the risk landscape.
