August 6, 2013 by Canadian Underwriter
Mitchell International Inc. of San Diego released last week a report on the appraisal values of insurable losses on vehicles in Canada, estimating the average final value appraisal value of collision losses at $3,162.
Mitchell, which makes software for insurance claims management and automotive repair shops, says its second-quarter data “reflects an initial Canadian average gross collision severity of $3,153, a $150 decrease over Q2/12.” The data was released Aug. 1 in Mitchell’s Industry Trends Report, Property Edition.
For collision losses, when Mitchell applied the “prescribed development factor,” the estimated final value was $3,162 for the second quarter of this year.
Mitchell’s prescribed development factor is essentially a method it uses to predict what the final (or actual) appraisal value will be 90 days after the quarter closes, as opposed to the “initial” appraisal value obtained when the quarter closes.
“These data are the product of upload activities from body shops, independent appraisers and insurance personnel, more accurately depicting insurance-paid loss activity, rather than consumer-direct or retail market pricing,” Mitchell stated in the report.
For the second quarter of 2013, the average actual cash value (ACV) of the vehicles in the collision losses was $14,434 and the average age was 5.37 years. In the fourth quarter of 2012, the average ACV was $13,926, the average appraisal was $3,040 and the average age was 5.61 years.
For comprehensive losses, the average initial gross Canadian appraisal value was $2,985, or $104 lower than in the same period in 2012. After applying the prescribed development factor, Mitchell projects the average appraisal value for comprehensive losses will be $2,988 for the second quarter. The average ACV of those vehicles was $14,827 and the average age was 5.65 years.
For third-party property damage, Mitchell’s Canadian industry initial average gross appraisal was $2,487 in the second quarter. It estimated the appraisal at $2,510 using the prescribed development factor. The average ACV of those vehicles was $13,081 and the average age was 6.77 years.
In a separate article in the same report, Mitchell’s vice president for industry relations, Greg Horn, noted there has been an “overall increase” in the average repair severity for sport-utility vehicles and cars.
“In general, cars have become more complex and have more painted panels such as color-coded bumpers and trim pieces,” Horn wrote.