Background

In the 1980s, after a car accident, insurance adjusters physically inspected cars then dug through newspaper classifieds, repair manuals and parts catalogues to figure out repair costs and salvage value. Founded in 1980, CCC digitized these workflows by digitally cataloging data and moving the workflow to computers. Over time, CCC expanded to body shops by developing software to estimate damage, manage repairs, and order parts. The internet created a step-change in CCC’s ability to augment productivity. More recently, the advent of AI, particularly AI’s ability to analyze accident photos, model repair costs, write estimates, analyze medical documents, and predict bodily injury has created another step-change in productivity.

Today, CCC is the de facto platform powering claims management, estimation and valuation for the top 26/30 auto insurers and 75% of body shops in the US. CCC processes 80%+ of all US auto claims. Moreover, CCC’s software connects to 6,500 ecosystem partners including parts suppliers, salvage yards, OEMs, lenders, and service providers creating network effects. CCC got here through a customer-obsessed culture, constant product iteration based on customer feedback, sustained R&D investments, a willingness to adopt technology early including cloud in 2003 and AI in 2016, and a stable long-sighted management (CEO joined in 1992).

CCC was an AI-company before AI became mainstream. CCC’s AI-powered estimation (launched 2021) allows adjusters and body shop technicians to upload photos using an AI-guided app to get repair estimates in seconds. CCC trains its AI with 500m new photos annually and massive amounts of repair data ($100bn in annual transactions). CCC’s AI can analyze the 3D parts structure of almost every part in the US carpark then translate that into a written estimate with localized parts and labour costs. While the current discourse is replacing $10k call center agents with AI chatbots, CCC is already replacing or augmenting $60k or $80k insurance adjuster. An estimate which took hours can now be done in seconds.

While CCC is dominant in auto physical damage (APD), CCC is early innings penetrating casualty. Approx. 1/5^th of accidents have a resultant casualty claim and the cost per claim is 5x higher making the market equivalent in size. CCC began organically penetrating casualty in 2019. This was turbocharged with the 2025 acquisition of EvolutionIQ which enhanced CCC’s AI capabilities and expanded CCC’s TAM into the adjacent disability and workers comp verticals.

Investment Thesis

Several industries still run on COBOL and Excel including banks, governments, and insurance. These verticals are technologically conservative because issues with implementations, functionality, or lost data can be catastrophic. It doesn’t help that these verticals are heavily regulated and struggle to attract and retain top tier tech talent. Software companies that are successful in these verticals tend to have decades of experience, strong references, and a stable management that has built trust over decades. There is an attraction investing in companies where longevity underpins the moat itself, similar to the luxury industry. CCC stands out for several reasons.

CCC is customer obsessed. CCC didn’t always have the best products, but always had a culture obsessed with listening to customers. They do ride-alongs with insurance adjusters, sit at their customer’s offices, visit body shops, and have customer advocacy councils segmented by customer type and size, all with the view to take customer feedback to improve the product. CCC’s focus on understanding customer pain points and constant iteration has led to CCC becoming the dominant software platform in claims management and led to CCC having very high customer satisfaction as evidenced by a leading NPS score of 82 and 99% gross dollar retention.

CCC has network effects. CCC has the leading platform for claims management at insurers and concurrently the leading platform for running body shops. By being the leader in both, CCC has created network effects. This is especially relevant with direct repair programs (DRP) where insurers have tight integrations with preferred body shops. Insurers are reliant on CCC to run their DRPs whilst shops are reliant on CCC to access customers. For example, State Farm mandates shops use CCC to participate in their DRP. CCC’s network extends beyond insurers and shops to 6,500 ecosystem players including parts suppliers, OEMs, salvage yards, and diagnostics providers.

CCC thinks and acts long-term. Despite having dominant share, CCC has not squeezed the lemon dry. Rather, CCC continues to invest 17% or $150m+ annually in R&D. They price their products based off a 5:1 ROI. CCC pursues modest price increases to build trust and drive higher share, similar to HEICO’s approach to PMAs. CCC’s culture was helped by having a long-tenured CEO (joined 1992) and management that has pursued a consistent strategy over time.

CCC is a clear AI beneficiary. In a world where AI can spin-up software in hours, software companies face existential risk. CCC is a clear AI beneficiary. CCC has a massive proprietary dataset. It sees 500m photos annually, processes 5bn+ transactions daily, and has processed $2tn of claims. Unique data means CCC can create differentiated AI-powered solutions including AI-powered estimation, predictive analytics, medical summarization, workflow software, and valuations.

Recommended Buy Price

Over the last 15 years, CCC grew at a low-teens rate driven by a mix of new logos (c.5%), cross-sell and up-sell (c.5%) and to a lesser extent, pricing (c.2%). During this period, CCC’s share went from c.33% to 80% as it signed large carriers who in turn drove body shops to join CCC’s network. The consolidation of body shops by MSOs acted as an additional tailwind as large MSOs converted acquired shops into CCC and added additional modules.

Given CCC’s high penetration, CCC is guiding towards a lower long-term growth rate of 7% to 10% plus an additional 1% to 2% from casualty via its recent acquisition of EvolutionIQ. In my view, this reduced growth rate is very achievable. While new logo growth is now expected to contribute c.20% to growth (vs. 40% historically), CCC has a 10+ year runway to drive higher module adoption, develop new modules, and expand into casualty. Moreover, CCC has latent pricing so should be able to achieve at least 3% from pricing alone. The recent surge in interest in AI should increase the willingness of insurance CTOs/CIOs to modernize and a normalization of claims volume provides an additional medium-term tailwind.

All-in, CCC should be able to comfortably grow top-line by 9% which translates to 13% growth in EPS assuming 50bps of annual margin expansion. If I underwrite CCC to those assumptions which implies CCC hits its 45% EBITDA guidance in 2035, based on a price of $7.6/share, I arrive at a 15% IRR and a $11/share intrinsic value using a 20x exit multiple (fully deducing share comp). CCC should command a better than market multiple in the 2030’s as it will have ample opportunities for further growth in casualty and the potential for international expansion. I also believe there is a significant call option from CCC leveraging the relationships and trust it has with insurers to expand into adjacent insurance areas including insurance underwriting or other lines such as home insurance.

While most of my ideas are not actionable when I release the write-up, CCC is actionable today. A mid-teens IRR for a durable business with network effects, a killer product, strong long-sighted management, attractive long-term growth opportunities and attractive growth optionality is compelling. CCC has traded poorly due to short-term concerns that are cyclical, not structural, providing a near-term opportunity for a cyclical recovery.

Industry Primer

When a car gets into an accident, there are dozens of interactions involving the driver, driver’s insurer, independent adjuster, body shop, parts suppliers, towing company, lender, title office, and medical providers. CCC sells primarily to auto insurers and body shops, but CCC’s software connects this entire ecosystem.

What happens after a collision?

When a driver is in an accident, they can either ignore the damage, pay for the damage themselves, or contact their insurer. If they go the insurer route, the insurer’s adjuster completes an estimate of the repair costs and a valuation of the car. Based on the results, the insurer may declare a total loss (25% of cars) or send the car to a body shop for repair (75%). The insurer will arrange for towing, a rental car, and suggest preferred shops.

In some cases, the insurer can use the estimate to reach a settlement with the end-driver (pay $1,000 for the damaged bumper rather than have it repaired). In other cases, the car is deemed a total loss. Cars can be sold for parts to salvage yards for 18% to 25% of their market value so if the estimated repair costs exceed the replacement cost net of salvage proceeds, the car is declared a total loss and sold via auction.

Once a vehicle arrives at the shop, the insurer shares their estimate with the shop. After looking under the hood, the shop completes their own estimate then goes back and forth with the insurer to arrive at a mutually agreed repair price. Once the repair starts, 63% of repairs require a supplement to cover unexpected costs[1]. Repairs typically take 10 to 14 days and average $4.8k.

In the background, the body shop collects the deductible from the driver and the balance from the insurer. The driver’s insurer may get these costs reimbursed with the at-fault driver’s insurer in a process known as subrogation. Subrogation involves the driver’s insurer sending a demand package with relevant photos, police documents, and witness interviews to the at fault driver’s insurers, who then reviews the file and negotiates the final payment.

What about the medical bills?

Approx. 1/5 of accidents have a resultant casualty claim with medical expenses from bodily injury and lost wages. The auto physical damage (APD) and casualty side of an insurer’s operations tend to be separate given casualty requires medical and legal expertise whereas APD requires expertise around auto repairs and parts procurement.

For 1^st party claims (the driver is at fault), medical bills are individually processed by the driver’s insurer. Every policy has different reimbursement rules, and every state has different medical costs and regulations, so software with decisioning engines is used to parse through and approve bills based on the insurer’s policy as well as state-level nuances.

For a 3^rd party claim (the opposing driver is at-fault), the process depends by state. In no-fault states such FL, KS, MA, MI, and NY, the driver’s car insurer pays all medical expenses then pursues recovery from the at-fault driver’s insurer. In at-fault states such as CA, TX, and OH, the driver relies on their own health insurance then files a claim directly with the at-fault driver’s insurer. In both cases, the end-payer is approving a large demand package (hundreds or thousands of pages) rather than approving bill-by-bill.

With 3^rd party claims, drivers often lawyer up, dragging out the process and increasing costs. Allstate estimates 3^rd party claims take 4 years on average for 80% of the claim to be paid. As a result, insurers are increasingly using predictive modelling to enhance injury detection (to settle early), analytical models to ensure claims get proper oversight, and increasingly, AI to support decisions around settlement and litigation, all of which CCC supplies.

Body Shop Industry

It is important to distinguish mechanical shops and body shops. Mechanical shops like NAPA, Meineke, Midas, and Monro focus on repairing mechanical components like engines, brakes, and transmissions. Their end-customers are drivers. Mechanical shops source mechanical parts from distributors like O’Reilly and Advance Auto. A car can be in-and-out in a few hours. CCC does not play here.

Body shops like Service King, Caliber and Gerber repair cars after collisions. Shops repair, replace and paint bumpers, doors and hoods, run diagnostics, and calibrate cameras and sensors. Shops source multiple types of parts such as OEM ($1,266 for a hood) from dealerships, aftermarket ($938) from suppliers like LKQ, and recycled or refurbished ($590[2]) from salvage yards like Copart. Parts prices impact the insurer’s decision to repair or scrap a vehicle. Repairs take 10 to 14 days. Given labour is half the repair costs, higher throughput from better equipment, materials, or software drives significant cost savings. A shop’s customer is the driver, but the payor is the insurer.

Repair costs have been increasing from inflation, labour shortages, and vehicle complexity. The average number of parts per repair has grown to 13+ (vs. 8.9 in 2013[3]) and the average parts price has been growing significantly above inflation. The increasing need for diagnostics and calibration of on-board sensors and electronics is adding to repair costs as it requires additional labour hours and specialized equipment. Anecdotally, it costs $10k to repair a Tesla bumper. At the same time, the labour pool is shrinking. The number of repair technicians declined from 158k to 153k from 2017-21 and COVID made labour issues worse.

In response to these pressures, insurers have established direct repair programs (DRP) with large multi-shop operators (MSOs). Insurers funnel repairs to MSOs in return for preferred pricing. MSOs leverage these higher volumes to invest in better equipment and technology, obtain procurement savings, and achieve higher throughput via operational know-how and best practices. In some cases, insurers may forego doing their own estimate and rely on an MSO’s estimate whilst auditing those estimates to save time and costs.

There are 40k body shops in the US doing roughly $1.8m in revenue. Roughly 20% are large MSOs chains such as Service King, Caliber, Boyd (public), and Crash Champions with 1k+ locations. Another 15% are owned by dealerships. The remaining 65% are medium-sized MSOs or small independents which are gradually getting consolidated by large MSOs. For example, in Oct 2025, Boyd (1,015 locations) announced the acquisition of Joe Hudson’s Collison (258 locations), which itself was a roll-up of small shops.

Insurance Industry

The auto insurance industry receives $330bn in premiums annually of-which 40% is paid out for APD, 40% casualty, and 20% opex (adjusters, overhead, technology). Approx. 1/5 of accidents result in casualty claims and the average claim is 5x higher than APD making claims paid equivalent. The auto insurance market is consolidated. The top 10 account for 77% of premiums, the largest being State Farm (18% share), Progressive (15%), Geico (12%), and Allstate (10%). Approx. 2/3^rd of repairs by the top 10 insurers are done via DRP programs.

With the acquisition of EvolutionIQ (EIQ), CCC entered the disability and worker comp market. This market is more fragmented with roughly 1k P&C insurers in the US with the top 10 accounting for 36% and top 30 accounting for 80% of premiums. Major players include Chubb (5% share), Travellers (5%), Liberty Mutual (4%), Hartford, Zurich, AIG, and Mass Mutual. There is overlap between auto and disability/workers-comp players including State Farm, Geico and Liberty Mutual, but many of the players are different.

Cyclicality in Claims

One of the issues facing CCC is cyclicality of claims. Approx. 20% of CCC’s revenue is transaction based of-which half is tied to claims volumes. Claims volumes has been a headwind for CCC (1% to 2%). The 2020-24 period saw significant inflation, exacerbated by supply chain issues and semi-conductor shortages which drove a shortage of new cars, which drove inflation in used cars, which drove higher recycled and refurbished parts prices, which further exacerbated parts inflation. Parts prices increased by 38% in 4 years, ultimately getting reflected in higher premiums. The CPI data shows car insurance premiums increasing 10%+ in 2023, 20%+ in 2024.

To offset higher premiums, drivers downgraded their insurance. From 2021-25, we saw a 6.4% decrease in $500 deductible plans and a 7% increase in $1,000 deductible plans. We also saw a significant decrease in claims filed. Consumers chose to self-pay or forego repairs fearing even higher premiums. The data from LKQ shows a 7% to 9% decline in claims and an offsetting 7% to 9% increase in unrepaired vehicles. According to CCC, 89% of accidents historically went through insurers but this has dropped to 75% in 2024. 

Miles driven and the number of accidents is stable to trending higher. The table below shows severe accidents with fatalities per vehicle miles travelled, which has trended higher since 2011 due to distracted driving.

As wages catch-up and parts prices normalize, claims volume will normalize given the cost of claiming a repair normalizes in favour of making the claim given the higher premiums paid. Progressive’s combined ratio for example is the best it’s been (excluding COVID given materially lower accidents) since 2006 driven by a double whammy of higher premiums and declining claims. With insurers at record profitability, premiums will come down, or claims will go up. In my view, analysts are overly concerned with this relatively modest and temporary headwind.

Q1 F2025 – CCC CEO responding to question on claims volume

“Yes, it does have an impact for us this year. But when you look at this business over multiple years, claim volume, for example, if I go back over the last 5 years, claim volume hasn't materially changed, but our revenues have increased about 60% or so over the last 4, 5 years.”

In “normal” environments, the volume of claims is resilient. COVID was a unique situation where lock downs temporarily impacted miles driven, which was subsequently followed by the inflation surge (data from 2022 Axalta Investor Day), but during the 2007-09 period, both miles driven and collision claims declined by <2.5%.

Impact from ADAS

An additional concern is the potential for advanced driver assistance or self-driving cars to structurally decrease accident rates. CCC itself is calling for a 30% decline in accidents by 2050 from a 2010 base-line. There are a few important caveats.

ADAS is nowhere near a tipping point. We are still at a point where accident rates are trending higher due to distracted driving despite ADAS features like forward collision warning reaching 90%+ penetration. Part of this is because the carpark takes 13 years to refresh. Part of this is that ADAS has been offset by higher technology content in cars leading to distracted driving. Part of this is that ADAS does not solve for weather, natural disasters, and bad driving leading to bumps and fender benders which cause the majority of collisions. The needle mover is self-driving cars where penetration is currently negligible and even if it accelerated, would likely take 20 to 30+ years for adoption to increase enough to be a material part of the carpark.

Declining collisions impact body shop volumes, but not revenue. The value of repairs has been inflating significantly as ADAS components like sensors, cameras, and software are increasing the number and complexity of parts, so the revenue opportunity for body shops is not declining with ADAS adoption. In the short- to medium-term, it is increasing. Boyd (a large MSO) generates 5% of revenue from calibration but this is one of the most important growth drivers given technology like sensors, anti-lock braking, and cameras require calibration. CCC similarly cites diagnostics for sensors, cameras, and software as a key driver for growth.

Even if repair costs decline and claims paid decline, it does not necessarily translate to software. The assumption is that insurers and body shops will use less software to offset declining revenue, but the opposite may happen where body shops and insurers use more software to drive efficiency to offset these headwinds.

In the section below (20+ pages total), I’ll outline

• Business Overview including Deep Dive by Division
• Competitive Landscape & Moat
• Management & Capital Allocation
• Sales, Contracts, and Support
• Growth
• Key Drivers
• Valuation
• Summary of Financial Model