Executives from Liberty Mutual Insurance acknowledged that the company will continue to raise auto insurance rates to offset an uptick in the frequency and severity of auto claims.

Boston-based Liberty Mutual said its fourth-quarter profits plunged 65 percent compared to the previous year ­– from $411 million in fourth-quarter 2015 to $143 million in fourth-quarter 2016. The company attributed the numbers to “elevated loss trends within U.S. personal and commercial liability.”

Still, the insurer reported full-year profits of $1 billion – nearly double its profits from 2015.

Liberty Mutual CEO David Long, who made $17 million in 2016, said the company has been seeing an uptick in collision severity since late 2015.

“We identified two primary causes for the increase,” Long said during the company’s fourth-quarter conference call. “First and not surprisingly, the increase in highway miles. Perhaps more importantly, the increase in distracted-driving highway miles are leading to more serious accidents. And second, repairs for cars with advanced driver-assistance systems involve a higher number of parts replaced per claim, and an increase in labor hours per claim.”

The bottom line, Long added: “The severity of claims is increasing, driven at least in part by the fact that safer vehicles are more expensive to repair.”

Underscoring his point, Liberty Mutual recently compared the costs of repairing minor front-end damage on a 2014 entry-level four-door luxury vehicle versus the 2016 model of the same car. For the 2014 model, the total repair costs were $1,846. For the 2016 model ­– which had adaptive cruise control and LED headlamps – the total repair costs were $3,551.

The 130 percent increase in parts costs came from the distance sensor ($1,216) and the headlamp assembly ($918), while the 18 percent increase in labor costs came from the extra time spent on sensor installation and recalibration.

The New Norm?

Tim Sweeney, president of global consumer markets for Liberty Mutual, said he expects the current uptick in accidents to subside over the next several years as new safety technology makes its way into more vehicles. However, the cost of repairing accident-damaged vehicles likely will stay “at this elevated level for quite some time,” he added, as vehicles incorporate more sophisticated technology.

“I think you can expect not worsening trends on the auto severity, but continued heightened trends,” Sweeney said. “I think we and most competitors have recognized that, and you’re seeing pretty substantial rate [increases] both by us and the marketplace.”

In January, the cost of auto insurance spiked 7.5 percent for U.S. consumers compared to January 2016, according to the U.S. Bureau of Labor Statistics’ Consumer Price Index for All Urban Consumers. Overall, the cost of goods and services rose 2.5 percent.

Earlier in the week, State Farm reported a 94 percent drop in profit for 2016, largely due to a $7 billion underwriting loss from auto insurance.