The number of underinsured motorists across the U.S. spiked in 2022 -- data revealed 15.7% of drivers did not carry enough insurance to cover damages and injuries in accidents they cause, a sharp increase of 3.1 percentage points from 2017.
The report, issued by the Insurance Research Council (IRC), a division of The Institutes, suggested this increase could be tied to several factors, including economic inflation and changes in driving behavior. The study analyzed underinsured motorist (UIM) and bodily injury (BI) liability claims from 10 major insurers, which represent about half of the U.S. private passenger auto insurance market.
According to the findings, the escalation in underinsured drivers was not uniform across the country. States like Colorado and Georgia witnessed the most dramatic increases, with Colorado's underinsured rate soaring to 40.9% and Georgia's to 37.3%. Conversely, Delaware saw a significant decrease in its UIM rate.
“At the start of the pandemic, both UIM and BI frequencies dropped as the shutdowns dramatically curtailed driving,” said Dale Porfilio, FCAS, MAAA, president of the IRC. “However, UIM frequency dropped less than BI. By 2022, UIM claim frequency had returned to its 2019 level while BI claim frequency was still below pre-pandemic levels.”
The report also shed light on the contributing factors to the rise in UIM rates, such as riskier driving behaviors, including speeding and distracted driving, as well as abuses in the legal system.
"The dramatic increases in the average severity of auto injury claims since the pandemic began have spurred higher UIM rates," Porfilio said.
In a recent webinar hosted by CCC, experts touched on how the rate of uninsured and underinsured motorists is affecting the collision repair and insurance industries.
Erik Bahnsen, assistant director of industry analytics for CCC, said 14% of drivers are completely uninsured, and third-party claims submitted for injuries caused by uninsured and underinsured motorists have increased 40% since 2021.
"There are a lot more under- and uninsured motorists," Bahnsen said. "If you get in an accident with one who caused the loss, you re going to have to make a claim where you didn't before. That will push even more of that group into the uninsured or financially stressed category, compounding the issue."
Tim Christ, solution expert for CCC, said that lack of coverage for some drivers also affects subrogation, which affects cycle time.
