Medical costs for auto injury claims in the U.S. outpace inflation: Insurance Research Council

A new study out of the United States shows that despite a downward trend in the severity of auto accident-related injuries, medical expenses reported by claimants continue to increase faster than the rate of inflation.

Looking at data from 2007 to 2012, the study released Monday by the Insurance Research Council (IRC) found average claimed economic losses – which include expenses for medical care, lost wages and other out-of-pocket expenditures – grew 8% annualized among personal injury protection (PIP) claimants, while average claimed losses grew 4% among bodily injury (BI) claimants.

In 2012, average claimed economic losses per PIP claimant had reached US$14,207, and average claimed losses per BI claimant had reached US$10,541, notes a press release from IRC, a division of the American Institute For Chartered Property Casualty Underwriters.

The findings are based on more than 35,000 auto injury claims closed with payment under the five principal private passenger coverages. Twelve insurers, representing 52% of the private passenger auto insurance market in the U.S., participated in the IRC study.

Over the 2007-2012 period, measures such as the percentage of claimants who had no visible injuries at the accident scene or who had fewer than 10 days in which they were unable to perform their usual daily activities provided evidence of a continuing decline in the severity of injuries, the statement adds.

“Medical care costs continue to escalate, especially among first-party claimants,” comments Elizabeth Sprinkel, senior vice president of the IRC. “Looking forward, the industry will need to continue its vigilance in contending with these expanding costs, particularly as it monitors the possible spillover effects from general healthcare reform,” Sprinkel continues.

The study report, Auto Injury Insurance Claims: Countrywide Patterns in Treatment, Cost and Compensation, 2014 Edition, provides information on injury, medical treatment, claimed losses and total payments, attorney involvement and the appearance of fraud and build-up.

Among other findings, the use of pain clinics, attorney involvement and claim abuse were found to exacerbate the increases in medical care expenses. The study found that contributors to the growth in medical care costs included the shift toward more expensive treatment and diagnostic alternatives, as well as dramatic increases in billed charges for visits to many types of medical providers.