Rising No-Payment Claims in Auto Insurance: Implications and Trends

In a significant shift for the auto insurance industry, 45% of liability and medical claims were closed without payments in 2025, a substantial increase from 35% ten years prior, according to a Wall Street Journal analysis based on data from the National Association of Insurance Commissioners.

This growing trend underscores the complexities and costs associated with resolving liability and medical claims, which are often exacerbated by legal representation. By contrast, collision and comprehensive claims have maintained a consistent closure rate without payment just under 25% over the same period. The Wall Street Journal’s analysis reveals that major insurers such as Liberty Mutual, State Farm, and Farmers have reported notable increases in their no-payment rates. Liberty Mutual's rate jumped to 54% from 29%, State Farm's rose to 47% from 26%, and Farmers saw an increase to 39% from 19%.

Factors Behind the Trend

Insurers cite escalating fraud and litigation as primary drivers of the increased closure rate without payment. Consumer advocacy groups, however, suggest that tightened claims management, coupled with a strategic focus on profitability, plays a significant role, as evidenced by a reduction in industry net loss ratios to their lowest levels since 2020. Claims can be closed without payment for various reasons, including the involvement of another insurer, claim withdrawals, policy violations, or claims falling below deductibles.

Broader Implications for the Auto Insurance Industry

Data from CCC Intelligent Solutions aligns with this trend, revealing an 11% increase in bodily injury claim frequency over two years, despite declines in other insurance sectors. Their findings also indicate an average annual rise in bodily injury claim severity by 10.3%, amounting to a 32% increase over four years. Rising insurance costs have prompted many consumers to defer repairs and reduce coverage. Collision repair shops seeking insights into specific insurer claims handling practices can utilize resources like the CRASH Network’s Insurer Report Card.

These trends hold significant implications for insurance professionals. As no-payment rates increase, claims management strategies and underwriting practices must adapt to balance profitability with consumer satisfaction. It is crucial for industry stakeholders to monitor these factors closely as they influence the competitive landscape and regulatory considerations in the years ahead.