Jeff Liaw
Chief Executive Officer at Copart
Thank you, Owen, and welcome everybody to our second-quarter 2025 earnings call. On our recent calls, we've discussed and addressed a range of long-term themes, including fundamental growth drivers for our insurance business, including macro forces such as total loss frequency, which we'll touch upon today, as well as the proactive levers that we control to drive our growth in that portion of our business. Those levers include, for example, our artificial intelligence-enabled image recognition tools, which can empower insurance companies to total cars more accurately and more effectively, as well as our vertical extension into new service offerings such as Title Express.
We've also talked about our response to major catastrophic events, including Hurricanes, and Milton from last year and we, of course have discussed as well our expansion -- the expansion of our business with sellers beyond the insurance industry to include financial institutions, rental car fleets, corporate fleets, among others. We would encourage you to revisit those prior calls for deep dives on those subjects. I would summarize today simply by saying that those big-picture trends continue.
First, we continue to grow our insurance volume, our auction liquidity and the returns we're generating for our sellers. Our insurance carriers with each passing day are entrusting us with more of the workflow that they once handled in-house, both day-to-day and in storm events as well. As one very visible example, now that we are processing well over 1 million titles per year via our Title Express platform, no carrier who has started with Copart has taken it back in-house. We also continue to grow our volume with our non-insurance sellers, benefiting, of course, from the flywheel effect of our auctions.
And finally, we continue to invest proudly and aggressively in our business in the form of technology, real-estate and people to fuel our future growth. I wanted to provide a few brief comments on our insurance business specifically before turning it over to Leah to review the financial results and to take a few of your questions. First, on our insurance business, our global volume grew 8% for the quarter in comparison to the same quarter last year. A little over half of this was attributable to the catastrophic events of the second-half of last year. As has been true since the dawn of our industry, we continue to experience increases in total loss frequency.
Of course, with the singular exception of the blip from 2021 to 2022 when ACVs or pre-accident values increased more than they ever had previously in Copart's history. For the 4th-quarter in the United States, total loss frequency hit 23.8%, an, an all-time high. So a portion of that is attributable to those storm events in the second-half of last year, which tend to have very-high total loss frequency rates. Nonetheless the full-year trend of 22.2% represents an all-time annual high and the total loss frequency drivers certainly continue unabated. Repairing cars becomes less attractive as time passes as labor costs increase, repair, parts cost increase and rental car rates do as well, while totaling vehicles becomes more attractive given the liquidity of our auctions, demand for our vehicles by international buyers and the salvage returns we're able to generate for our sellers.
A couple of inquiries we've received in recent days that I thought might be worth addressing today. First is the question about whether insurance coverage in general has changed. And I would note that over the past two years, the insurance industry has generally achieved rate relief through state regulatory bodies and consumers have certainly felt those changes in the form of higher rates for their auto policies. This has caused a modest increase in the uninsured population relative to pre-COVID levels, certainly.
Over many years, we've observed this to be a cyclical trend, meaning the uninsured motorist rates tends to go up-and-down over the years -- over the years. And given where we sit right now, it likely is a modest -- it represents a modest offset to the growth in our insurance business. The second topic I wanted to address briefly is the question of what potential tariffs mean for our business. And I'll take a US-centric view first to addressing this question. It's frankly similar to an inquiry that we get from time-to-time about whether high used-car prices or low used-car prices are better for our business.
The reality is that we're somewhat ambivalent and in this case, the bottom-line of a potential tariff-oriented approach would be that it's largely neutral to our business, though with a complex tapestry of offsetting forces, some of which we'll briefly touch on today. As you know, in general, the effects of tariffs are largely inflationary for each of the factors that in-turn affect our business with the corresponding downstream effects on our unit volume, our selling prices and our operating profit. Here are a few such examples.
Inbound tariffs in isolation would increase the cost of repair parts for vehicles, which all else equal would increase total loss frequency and drive increased volume to Copart. Inbound tariffs, however, would also increase pre-accident values or actual cash values to use the American parlance, which in isolation would increase the cost of total losses to insurance carriers, reducing total loss frequency and suppressing volume to Copart. But those inbound tariffs would also increase the selling prices for the vehicles that we sell at auction for the very same reason, yet again driving total loss frequency up and improving our unit economics as well. If the story stopped there, I'd characterize the effect of tariffs as being modestly positive to Copart.
The great unknown, however, is what inbound tariffs for shipments to the United States, whether those tariffs could precipitate retaliatory tariffs from the same countries against whom we are imposing them. On its space, those tariffs might appear to suppress selling prices for our vehicles at auction. However, for the automotive industries, the countries that would face the most substantial tariff burdens such as Germany, Japan, Mexico and Canada are generally not the providers of critical high-value liquidity for our auctions. Those nations are typically in Eastern Europe, the Middle-East and Africa.
As has been true now for many years, economic outcomes for our sellers and for Copart at our auctions are largely driven by the cars that we are selling as repairable drivable cars, not as parts to be harvested nor as metal to be scrapped. The countries who are hungriest for these types of cars generally do not have substantial domestic auto manufacturing capabilities and as such are not likely to be subject to significant automotive tariffs against which to retaliate in the first-place. That's a bit of a long-winded answer, but in sum, I think we believe the tariffs would have a likely neutral to modestly positive effect on our business and we faced enough such inquiries that I thought it was worth exploring in greater detail.
We concluded our quarter and are pleased with the results, and I'll hand the -- I'll hand it to Leah to describe those more fully.
