Jeff Liaw
Chief Executive Officer at Copart
Thank you, everyone, for joining the earnings call for our first quarter for fiscal 2025. On our recent calls, we've been talking about some important themes about our business, including our recent growth with bank rental and fleet sellers. We talked about Title Express, a new offering we're offering the insurance industry. We've talked about sustainability, and we've talked about growth in our international businesses as well as in the heavy equipment space as well.
Today, with the first quarter past us for this next fiscal year, we thought it would be a good opportunity to reflect specifically about our insurance business specifically. There are two themes I wanted to draw upon today. First is our response to the recent hurricane activity in the Southeastern United States. And the second is the longer term trends that we observe in the insurance industry more broadly.
First, regarding the recent flurry of hurricane activity. In late September of this year, Category 4 Hurricane Helene made landfall in Florida. Severe flooding, of course, struck the Tampa, St. Petersburg area and eventually caused significant damage elsewhere in Florida, Georgia and North and South Carolina, including areas not accustomed to dealing with storms of this magnitude.
Then less than two weeks later, Category 3 Hurricane Milton struck Florida again. The back-to-back nature of the storms added a level of complexity to our storm response that we hadn't previously experienced, including a brief evacuation of our own people in certain most dangerous areas. In comparison to Hurricane Ian, a similarly scaled and located storm from just two years ago, our advanced preparation and our team's execution this time around yielded still better results with approximately twice as many vehicles picked up in the first 10 days of these 2024 storms in comparison to Ian in 2022.
As always, our emphasis is on retrieving, processing and selling vehicles as quickly as we can to help restore the communities in which we do business back to their prior state and to assist our clients, the major insurance companies in resolving their claims with policyholders as quickly as they can. To that end, by the end of October, just three weeks after landfall for Milton, we had sold approximately a quarter of all of the assigned vehicles we would ultimately receive from both Helene and Milton.
In fact, according to one third-party source, three out of every four catastrophic units sold in Florida during the month of October were sold on Copart's auction platform, a reflection both of our presence as well as the speed of our execution. This go around, our proactive storm preparation was marked by three pillars. First, the dedicated owned storage capacity that we hold in reserve for storms of this nature, representing nearly 2,000 acres nationwide and approximately 1,000 acres specifically for the Helene and Milton areas alone.
Second, our technology and logistics teams have deployed real-time tools that serve both our own people as well as our third-party towing network as well as our own employed drivers in optimizing routing and optimizing dispatch for the rapid retrieval and movement of vehicles through our network. And finally, our Industry leading contracted and full-time towing and transport network, which we have steadily built up over the years, was able to respond with unprecedented speed in this instance.
I've already had an opportunity to do so face-to-face with many of the Copart employees, but we again wanted to extend our heartfelt gratitude to the more than 1,200 folks and their families who sacrifice for days, in some cases, weeks and months at a time to work in challenging conditions to work long hours to assist again, our clients, our people and our communities.
Turning our attention to our insurance business more broadly. Our insurance business grew approximately 13% for the quarter in unit volume when excluding the effect of catastrophic events, we grew 9% year-over-year for the quarter. Total loss frequency was certainly one of the major catalysts we experienced with total loss frequency for the calendar quarter ending September 30 reported by CCC of 21.7%, an increase of almost 2% year-over-year.
More broadly, though, we wanted to pause for a moment to reflect on longer-term industry trends. There, as you know, have been a steady drumbeat in the news media and in various company announcements on accident avoidance technologies and autonomous driving rollouts over the past decade plus. And in addition, we have encountered a number of inquiries in recent days from investors and other interested parties on this subject as well. Our answer here will be especially US centric, but the takeaways, I think, are broadly applicable to the markets in which we do business.
We all, of course, draw inference from our own empirical experience. The cars we drive, we now experience more of the safety technologies in the form of lane departure warning systems that buzz our steering wheels. Rear cameras that we probably all use when we back up our cars nowadays. And many of us have also taken rides in autonomous taxis within the geo-fence areas in which they're operating today. We think there's also insight to be derived, however, from multiple decade trends that we can observe in actual data.
There are four factors I wanted to draw out today. And then a secondary consideration I wanted to offer that inform our perspective on the long-term organic growth trends in our business. The first is simply population growth. Since 1960, population in the United States has grown at 1% compounded which sounds like a fairly modest growth rate, but over a time horizon of that scale, our population has almost doubled in the United States.
The second consideration is vehicle miles traveled, which over that same horizon, plus or minus, has grown at 2%. As a result, vehicle miles traveled over that horizon has quadrupled from 1960 to today, which is to say that ultimately, vehicle miles traveled as the country grows more populous and more prosperous as United States has done generally outpaces population growth alone.
We're all aware, of course, of the anomalous very well-documented steep decline in vehicle miles traveled in 2020, courtesy of COVID-19. We are now above pre-pandemic peaks on this specific metric. If you were to look at a visual chart showing vehicle miles traveled over this 60-plus year period, I think you'd likely also conclude that we still have several years of return to work tailwinds ahead of us as more and more businesses implement those policies.
The third phenomenon I wanted to comment on specifically is accident rates and their long-term trend downwards. So over the past 30 years, the Department of Transportation has published data on police reported crashes. There is one anomalous trend from the 2014 to 2018 period, I think, marked likely by the proliferation of smartphones and the addictive apps that certainly afflict us all that caused accident rates actually to increase in certain years during that period.
But nonetheless, over the decades long horizon we've seen a steady decline in accidents per miles driven. And in fact, today versus 1990, there are approximately one-third fewer crashes and fatalities per million miles driven. But in absolute terms, that decline has only been 8% because of the offsetting effects of the growth in population in vehicle miles traveled.
Safety technologies penetrates gradually into new vehicle shipments and still more gradually into the installed base of drivable vehicles. And it is that fleet effect, which causes the gradual decline in accidents relative to the perhaps more innovative technology deployments exhibited or implemented by OEMs today.
And then the fourth and most important driver of our business is total loss frequency itself. It has been the key catalyst in our growth now for decades, and it's grown more than fourfold since 1990. This, again, is a phenomenon that has exhibited a nearly monotonic increase over that period, but for an anomaly in late 2021 and early 2022 when the pop and used car prices made total loss a relatively expensive settlement procedure for insurance companies, briefly suppressing total loss frequency.
We are yet again above pre-pandemic highs on this specific metric. The long-term catalyst here is that vehicles become ever more complex, including for reasons the safety technologies we've already talked about today and, therefore, more expensive to repair rendering the repair path less attractive while also the intrinsic value of these vehicles rise via our marketplace. We find still more buyers in places like Eastern Europe, Central and South America, Africa and elsewhere where their mobility needs are ultimately satisfied by our wrecked cars.
The proliferation of safety technologies that drive accident frequency down, and by the way, there have been multiple rounds of these technologies over the decades from anti-lock brakes in the '70s and '80s to the more sensor-driven technologies of today. But the proliferation of these technologies is not incidental to total loss frequency, but in fact, it's directly causal.
These technologies tend to be enabled by sensors and chips often configured on the perimeter vehicles rendering them quickly and easily damaged in an accident in raising the cost of repair as a result. Those cars in turn are still quite valuable to our destination markets as drivable contributors to the mobility in those markets.
One additional secondary driver, I thought was worth mentioning today is the phenomenon of uninsured, underinsured and undercapitalized motorists specifically. On the point of uninsured or liability only drivers. There is a very clear 30-year-plus trend downward meaning over time in a market like the United States, insurance coverage generally becomes more robust.
We do, however, observe cyclicality within that longer-term secular trend driven in part by insurance premiums, the economic health of the country and so forth. In the past year or two, in particular, the insurance premiums have generally increased at a pace -- at a rate outpacing other components of the consumer experience, in part because of the natural regulatory lag in raising insurance rates.
As a result, then, the liability only plus uninsured motors combined are a greater share of the drivable fleet than they had been in prior years. Again, the long-term trend here appears to be a secular trend downwards in any case.
The upshot of all of the above for us is that as we look forward on a five year, 10 year and 20-year horizon, our baseline expectation continues to be of ongoing organic industry growth as population and vehicle miles traveled trends plus total loss frequency, most importantly of all, more than offset declining accident frequency, safety technologies penetrates new vehicle shipments and eventually the drivable fleet. We do expect perhaps more volatility from contributors such as used car prices from severe weather events and the like on both fronts then we're investing accordingly to ensure that we have the physical technology and people capacity to serve our insurance clients under any conditions.
With that, I'll hand it over to our CFO, Leah Stearns.
