Report: Medical Costs for Auto Injury Claims Outpace Inflation

According to a new study, medical expenses reported by auto injury claimants continue to increase faster than the rate of inflation -- even though injury severity remains on a downward trend. The Insurance Research Council (IRC) released the report.

The IRC study found that from 2007 to 2012, average claimed economic losses grew 8 percent annualized among personal injury protection (PIP) claimants, reaching $14,207 per claimant in 2012. These claimed losses included expenses for medical care, lost wages and other out-of-pocket expenditures.

Among bodily injury claimants, average claimed losses grew 4 percent, reaching $10,541 per claimant in 2012.

But over the same period, there was clear evidence of a continuing decline in the severity of injuries. This evidence included 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.

The study examines several factors fueling the growth of medical care costs. These factors include 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. The study concludes that pain clinics, attorney involvement, and claim abuse exacerbate the increases in medical care expenses.

The study is titled, Auto Injury Insurance Claims: Countrywide Patterns in Treatment, Cost and Compensation, 2014 Edition. 

The IRC collected data on more than 35,000 auto injury claims closed with payment under the five principal private passenger coverages. Twelve insurers, representing 52 percent of the private passenger auto insurance market in the Unites States, participated in the study.

The Insurance Research Council is a division of the American Institute For Chartered Property Casualty Underwriters (The Institutes).