In recent years, the personal auto market has been anything but stagnant.

As sharing services and automotive telematics heat up, here are two related trends that will have a big impact on the pool of personal auto risks in today’s marketplace:

Lower frequency, higher severity. “What we’ve seen is ongoing stabilization and in some cases downward trends of frequency, with upticks in severity,” says Allen Anderson, senior vice president of personal lines at Selective Insurance Companies of America. “Obviously frequency can only go so low, but we’ve said that before. As cars get safer, it continues to go even lower.”

As trends like usage-based insurance and automotive telematics increase safety on the roads, “it’s likely that accident frequency will continue to go down,” says Dave Pratt, general manager of usage-based insurance at Progressive. “There’s a counter-balancing effect, though—these cars with all this fancy equipment are more expensive to repair when there is an accident.”

The combination makes it difficult to predict future pricing. “If you look at the history over the last 30 years, in general you’ve seen accident frequency coming down pretty consistently, but severity going up,” Pratt points out. “That’s a great thing for society, because there aren’t as many people suffering accidents. Unfortunately, it just costs more to fix these fancy cars.”

Laura Sherman, founding partner of Baldwin Krystyn Sherman Partners and an instructor with the National Alliance for the Certified Personal Risk Manager designation, sees minor accidents costing more to repair. “We’ve had a lot of flooding in Tampa, and we had well over 20 cars that got totaled by driving through water,” she says. “A lot of it they say is strictly because of all of the electronics and the motherboard being so low to the ground.”

“Anyone who’s bought a new car recently knows they’re getting more and more complicated,” Anderson agrees. “There are no thousand-dollar fender benders anymore. You hit a bumper on a car and you’re replacing cameras and sensors and all sorts of other things in addition to just the bumper. As manufacturers move closer and closer to driverless cars, you’re going to see severity continue to be a challenge.”

Millennial behavior. One of the biggest personal auto challenges Generation Y presents is an apathetic approach to property ownership. “We’re all seeing the migration back to more urban centers,” Anderson points out. “If people have a car at all, they’re probably going to have just one rather than multiple ones. The auto is less significant for young people than it would have been in the past. Both my kids are in college in Boston, and they wouldn’t want a car if I offered it to them.”

Sherman, who serves on several insurer councils, including the Advisory Board of the Council for Insuring Private Clients, AIG Private Client Group National Broker Council, says her agency has a lot of clients whose children are moving to larger metropolitan areas where they can utilize mass transit or even walk to work. “They want their independence,” she says. “If they don’t have their car with them, they’re keeping it back at their parents’ house.”

But whether they still need insurance for a car they might drive occasionally or they’re simply utilizing popular services like car- and ride-sharing, parents and their millennial children need guidance about related risks.

“I’m finding that young people who live in larger metropolitan areas are having more accidents more quickly in their driving career,” says Sherman. “I don’t think we’re necessarily preparing them as well as we should be. Even if they don’t have a car, what about uninsured motorists? What about if they drive another car? What are the potential risks? They may not view that as an exposure today, but what happens when they want to take a drive outside the city and they borrow or rent a car?”

“Someone who’s younger, who’s just getting started, who doesn’t have a lot of assets to protect yet, who’s living paycheck to paycheck—they want to have as low a cost as possible,” adds Jeff Ogard, vice president, agency relations for Safeco Insurance. “But they still value a trusted advisor who will help translate and navigate the purchase for them. And then with time, as their income grows and they have more to protect, the relationship between agent and consumer deepens.”

Want strategies on how your agency can compete effectively in personal auto in light of how the market is evolving? Keep an eye on IAmagazine.com and upcoming issues of the Markets Pulse e-newsletter.

Jacquelyn Connelly is IA senior editor.