Insurance - Property & Casualty: May 2026 Auto Insurance CPI Data: Slight Upticks in Input Costs

Research evidence excerpt

Insurance - Property & Casualty: May 2026 Auto Insurance CPI Data: Slight Upticks in Input Costs

Update

June 11, 2026 02:01 PM GMT

Morgan Stanley & Co. LLCMInsurance - Property & Casualty | North America Bob Jian Huang

Equity Analyst

May 2026 Auto Insurance CPI Bob.Huang@morganstanley.comDaniel Lee, ACAS +1 212 761-6136

Research Associate

Daniel.Lee4@morganstanley.com +1 212 761-0219

Data: Slight Upticks in Input Siddhant Shah

Sid.Shah@morganstanley.com +1 212 761-2603

Costs

Vehicle repair costs and used car prices ticked upward. Major input drivers for

auto insurance losses saw mixed results YoY vs. the prior month ( Exhibit 1 ). Slower Insurance - Property & Casualty

CPI trends should ease prior concerns about inflation hitting the auto insurance North America

Industry View Attractive

sector while pricing deteriorates. While 2025 inflation was elevated, major

components such as used car prices ticked up to -2.0% YoY vs. -2.7% last month.

Vehicle repair costs, one of the key headwinds to auto losses from 2022 to 2025,

increased on a YoY basis (+4.4% increase vs. +3.3% last month). YoY CPI for vehicle

parts decelerated slightly, at +2.1% vs. +3.8% in the prior month, and medical care

CPI YoY was generally flat at +2.6% (vs. +2.5% last month).

Where do auto underwriting margins go from here? As auto parts, repair costs,

and used car prices remain relatively stable, go-forward auto loss severity will be

the key focus for auto insurers. Given the data over the past several quarters, we

believe pricing should be below loss cost trend, and total loss ratio for the personal

auto industry should deteriorate going forward.

Exhibit 1: Auto severity related CPI component YoY generally stable

Auto Severity YoY Trends - CPI Components

50%

40%

30%

%

Change 20%

YoY 10%

0%

-10%

-20%