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Lost in the LOR: Staffing shortages, parts availability continue to boost LOR nationwide, report says

Toronto, Ontario — Enterprise has released its Q3 Length-of-Rental report which, in spite of an impressive bout of perseverance in Alberta amid several severe weather events, Canada has seen an overall increase in rental periods across the board.

Nationally, rental periods increased by 5.1 days from 11.4 in 2021 to 16.5 days over the same period this year.

The report shone a light on how Alberta made it through the third quarter with only a 3.1 day increase from last year, despite a summer marred by tornados and hailstorms. Over the past year, the province has seen LOR go from 11.6 to 14.7 days; 1.8 days shorter than the national average, despite the summer’s challenges.

Ontario recorded the longest average rental periods on the provincial level, with LOR skyrocketing from 12.5 to 19.3 over the year—a 6.8 day increase.

Quebec saw the most drastic change in LOR, with average rates climbing 7.9 days, from 10.6 to 18.9 days, over the course of the year.

Looking eastward, Newfoundland and Labrador and Prince Edward Island posted the shortest rental periods nationwide, in addition to incurring the least amount of change from Q3 2021 to 2022, with the Atlantic provinces sitting at 13.7 and 13.9 days respectively.

In Q3 2021, New Brunswick had an average comparable to its eastern neighbours, at 11.3 days, but saw a sharp spike in LOR leading to a Q3 2022 average of 14.8 days.

Director of claims performance for Mitchell International, Ryan Mandell dug into the class-specific data of these claims, finding that “Luxury vehicle frequency continues to increase with 14.56 percent of repairable vehicles in Q3 2022 being classified as a luxury make compared to 13.93 percent in Q2 2022 and 13.76 percent in Q3 2021. On average, we observe that from 2021-2022, luxury vehicle keys-to-keys cycle time is 2.3 days longer than common make vehicles.

“Trucks and SUVs increased their share of repairable claims volume in Q3 2022 to 59.12 percent, up from 58.64 percent in Q2 2022 and 58.43 percent in Q3 2021. On average, we observe that from 2021-2022, truck/SUV keys-to-keys cycle time is 1.1 days longer than passenger cars,” said Mandell.

In terms of driveable claims, LOR is sitting at 11.9 days nationally, up by 2.8 days from 2021. Ontario recorded both the highest driveable LOR nationwide, at 14.4 days, as well as the greatest year-over-year change of 4.4 days. PEI recorded the lowest driveable LOR of 8.4 days, down half a day from last year.

Non-driveable LORs have felt the greatest impact of all, according to the report, with national rates jumping 12.8 days to hit a Q3 2022 average of 31.4. In comparison, the U.S. average LOR for non-drivable rentals was 27.2 days, which was up 5.3 days from Q3 2021.

PEI currently has the longest non-driveable LOR at 39.1 days—a fact likely to be a symptom of limited parts availability on the island. Ontario, Alberta and Quebec recorded rates of 33.7, 29.1 and 26.9 days respectively.

Total loss LOR sits at 23.8 days nationally, with New Brunswick recording the highest average of 30.7 days and Newfoundland and Labrador recording the lowest at 17.7 days. New Brunswick’s average is the result of a 5.5 day increase over the year.

When asked about repairability and total loss mixes, Mandell said, “Overall repairable volume grew by 0.64 percent in Q3 2022 compared to Q2 2022 and by 11.16 percent compared to Q3 2021.

“The increase in repairable volume is not only being driven by growth in kilometres traveled but also by the lower relative frequency of total loss outcomes due to higher vehicle ACVs. Total Loss frequency stands at 15.7 percent in Q3 2022, up only slightly from 15.6 percent in Q2 2022 but down significantly from 19.3 percent in Q3 2021.”

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2 Responses

  1. So from this, we see that the insurers need to focus on matching the LOU endorsement to cover the reality of our demographics. How do you do that? You ask… brokers and agents need to explain to clients how Loss of Use (LOS) works and the factors surrounding it. Also, they will have to spend time educating the clients on parts issues with the supply chain, increased repair time due to advanced construction of the vehicle and how the processes have changed over time as the vehicle has. With this information, the client purchasing coverage can make appropriate decisions based on facts.

    * NOTE: nowhere in this scenario is this an issue to be dealt with by the repair facilities; we don’t sell
    LOU; insurers do. Ergo, stop forcing the repair facilities to overcome your shortcomings.

  2. Lets have a conversation about this. I agree , repair facilities are being penalized for someone else paying someone else premium’s… the middleman is being charged. Talking about fairness 👏👏

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