Distracted Driving and Rising Claims Costs Put US Motor Insurers Under Pressure

The US motor insurance sector is facing a period of mounting strain, driven by a sharp increase in distracted driving offences, higher claims costs and a growing willingness among consumers to switch providers. New data from the 2026 LexisNexis U.S. Auto Insurance Trends Report paints a picture of a market being pulled in several directions at once, with insurers having to respond to both changing behaviour on the road and greater price sensitivity among policyholders.

A major concern is the rise in distracted driving. Since 2022, violations linked to distracted driving have increased by 57 per cent across all age groups. The trend is not confined to younger motorists. Drivers aged 36 to 45 have seen increases of more than 70 per cent, while the figure for drivers aged 66 and older has risen by 73 per cent. Although total miles driven have gone up only slightly, traffic violations have returned to pre-pandemic levels, suggesting that driving habits and enforcement patterns are shifting in ways that are making the market harder to predict.

At the same time, households are becoming more conscious of the cost of insurance. After years of rising premiums, many drivers are changing their cover to keep expenses under control. Policies with deductibles of 1,000 US dollars or more have risen from 23 per cent in 2022 to 33 per cent in 2025. Insurance is also playing a bigger part in vehicle buying decisions. More than half of consumers now say the cost of cover influences the car they choose, making it one of the most important factors in overall ownership costs.

This pressure on household budgets is contributing to a surge in shopping activity. In the final quarter of 2025, policy shopping reached its highest level on record. More than 47 per cent of policies in force had been shopped at least once in the previous year. That level of movement points to a market in which loyalty is becoming weaker and competition more intense, particularly as motorists search for ways to soften the impact of sustained rate increases.

Insurers are also contending with a more complicated vehicle mix. Older vehicles still make up a significant part of the market, with 15 per cent of cars on US roads now more than twenty years old. At the same time, 30 per cent of insured vehicles are from model year 2020 or newer. This creates a more uneven claims environment. Newer vehicles may benefit from safety technology that helps reduce some accidents, but they are often more costly to repair. Older vehicles, meanwhile, can bring reliability and valuation issues that make risk assessment less straightforward.

Another major pressure point is bodily injury claims. These now account for more than 26 per cent of total claims spend, compared with less than 20 per cent in 2022. The ratio of bodily injury claims to property damage claims has also increased, rising from 24 for every 100 property damage claims in 2022 to 29 in 2025. Even where collision frequency is falling, the growing cost and severity of injury claims is making overall claims performance more volatile.

Taken together, the figures suggest that the US motor insurance market is becoming harder to navigate. Insurers are no longer dealing only with inflation and repair costs. They are also facing shifts in driver behaviour, more selective consumers and a claims picture that is increasingly shaped by injury severity. In a market like this, success is likely to depend on sharper underwriting, more accurate pricing and a stronger understanding of how risk is evolving.