Even as Reported Injuries Become Less Severe, Medical Costs Skyrocket

Medical expenses reported by auto injury claimants continue to rise faster than the rate of inflation, in spite of the fact that the severity of the injuries themselves remains on a downward trend.

A new study by the Insurance Research Council (IRC) found that from 2007 to 2012, average claimed economic losses (which include expenses for medical care, lost wages and other out-of-pocket expenditures) grew eight percent annualized among personal injury protection (PIP) claimants, reaching $14,207 per claimant in 2012.

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

Over the same 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, according to IRC.

The study examines several factors in the growth in medical care costs, including 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 use of pain clinics, attorney involvement, and claim abuse were found to exacerbate the increases in medical care expenses.

“Medical care costs continue to escalate, especially among first-party claimants,” said 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.”

The study, “Auto Injury Insurance Claims: Countrywide Patterns in Treatment, Cost and Compensation, 2014 Edition,” is the seventh of its kind conducted by the IRC, which 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 U.S., participated in the study.

Source: www.insurance-research.org