Mitchell Releases Latest Edition of Industry Trends Report
Relationship between fuel price spikes and total loss values shows need for market-based valuation.
SAN DIEGO, CA—August 10, 2011—Mitchell International, Inc., a leading provider of technology, connectivity and information solutions to the Property & Casualty claims and Collision Repair industries, today released the third quarter 2011 edition of its Industry Trends Report (ITR)—the company's quarterly publication that highlights industry-related trends, news items and statistics. In this ITR, Mitchell's quarterly feature discusses how volatile and sustained high fuel prices are impacting insurance claims—beyond a reduction in miles driven. Specifically, the article discusses how this phenomenon, along with market reaction time, is affecting total loss values. Market reaction time is the delay between the rise in fuel prices and the rise in value of the most fuel efficient vehicle.
This edition's Quarterly Feature, "Timing is Everything: Total Loss Values and Gas Prices," by Mitchell's Vice President of Industry Relations, Greg Horn, delves into Mitchell's Total Loss Valuation Data Warehouse to explain how rapid changes to the price of gasoline this year are impacting resale values for fuel efficient cars, hybrids and—at the other end of the spectrum—gas guzzlers differently.
"To determine the relationship between fuel price spikes and values, we examined the Toyota Corolla, Prius and the Ford Expedition as representatives of the fuel efficient, hybrid and gas guzzler vehicle categories,” said Horn. “Our claims data fell in line with other reports and market sources and did show that fuel efficient vehicles tend to rise more quickly and reliably in value during periods of high prices than gas guzzlers, which fall in value.”
Horn added, "Significantly, our analysis showed a market reaction time during fuel price volatility of approximately three weeks—a delay between the rise in fuel prices and the rise in value of the most fuel efficient vehicle in our study—the hybrid. Gas guzzlers, which are traditionally more volatile during fuel price fluctuations, showed a similar lag pattern. The insurance and collision repair industries need the accuracy of a true market survey method for valuing a total loss because constantly fluctuating fuel prices move too fast, with too great an impact, for slower traditional 'book value' valuations to accurately reflect the true actual cash value of total loss vehicles."
Other valuable points of interest in the current issue of Mitchell's ITR include:
- Mitchell's Q2-2011 data reflect an initial average gross Collision appraisal value of $2,761—$90 less than this same period last year. However, applying the indicated development factor of 9% suggests a final Q2-2011 average gross collision appraisal value of $3,008. The average Actual Cash Value (ACV) of vehicles appraised for Collision losses during Q2-2011 was $13,705—an increase of $500 over the same period last year.
- In Q2-2011, the average gross appraisal value for Comprehensive coverage estimates processed through Mitchell servers was $2,854—compared to $2,625 in Q2-2010. Applying the prescribed development factor of 1% for this data set produces an increase in the adjusted value to $2,883—reflecting the strong storm season with many hail claims.
Complete content is available in the latest Industry Trends Report, which may be downloaded in PDF format by visiting www.mitchell.com. First published in April 2001, Mitchell's Trends Report has grown in both content and circulation, now reaching more than 33,000 collision and casualty industry professionals.
About Mitchell International, Inc.
Mitchell International, Inc. empowers clients to achieve measurably better outcomes. Providing unparalleled breadth of technology, connectivity and information solutions to the Property & Casualty claims and Collision Repair industries, Mitchell is uniquely able to simplify and accelerate the claims management and collision repair processes.
As a leading provider of Property & Casualty claims technology solutions, Mitchell processes over 50 million transactions annually for over 300 insurance companies/claims payers and over 30,000 collision repair facilities throughout North America. Founded in 1946, Mitchell is headquartered in San Diego, California, and has 1,700 employees. The company is privately owned primarily by the Aurora Capital Group, a Los Angeles-based investment group. For more information about Mitchell, visit www.mitchell.com.
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