Report: Auto Injury Claim Costs Soar

The study found that reported losses for bodily-injury liability, personal-injury protection and medical-payments claimants all grew between 1997 and 2002. The increase was particularly notable among personal-injury protection and medical-payments claimants. For example, average personal-injury protection losses jumped from $4,804 in 1997 to $6,711 in 2002, while medical-payments losses rose from $3,348 to $4,621 during the same time interval.

The IRC study, based on some 70,000 auto injury claims collected from insurers nationwide, reported that escalating medical costs are "the key factor" behind this growth in losses. The group also observed a number of emerging claim patterns related to medical treatments from 1997 to 2002. Its findings are as follows:

Injury patterns remained consistent. The seriousness of auto injuries, however, actually declined.

Despite declines in the overall seriousness of injuries, the study found increases in the use of certain medical professionals and the costs associated with their use.

The number of different medical professionals visited increased, as well as the use of chiropractors and physical therapists as well as massage therapists. The number of times claimants received treatment from these professionals also rose.

Average charges for treatment by these same medical professionals rose considerably, the study found.

Claimants were likely to get more expensive diagnostic procedures using magnetic resonance imaging (MRI), while the proportion receiving X-rays decreased. In addition, the average per-procedure charge for most diagnostics jumped.

Sprains and strains continued to be the most common type of injury reported by at least eight out of 10 auto injury claimants.

A smaller percentage of claimants in the 2002 study experienced any disability or fatality as a result of auto injuries. Additionally, fewer claimants experienced days of restricted activity or missed time from work.

"Given the development of numerous automotive safety innovations and increased emphasis on improved highway safety legislation, it is not surprising that we would see evidence of a decline in the seriousness of injuries related to auto accidents," commented Elizabeth Sprinkel, senior vice president of the IRC.

However, she added, "the paradox of increases in auto injury costs" from the higher usage of medical resources and escalating medical expenses, despite declines in injuries, suggests that the auto insurance system may be vulnerable to overuse.

"This is a concern for the public because rising auto injury losses ultimately translate into rising auto insurance premiums," Ms. Sprinkel said.

The IRC report also found that claim payments have not risen as substantially as losses. Yet the study found that on average, bodily-injury liability payments continue to exceed losses. Growth in claim payments was strongest among the most seriously injured claimants, IRC said.

"The encouraging payment trends noted in this study suggest that the auto insurance system is becoming more efficient in compensating claimants with respect to the seriousness of their injuries," Ms. Sprinkel said. "It is the role of insurance to indemnify injured persons for their losses, and the study suggests that insurers are doing a better job of putting payments in the hands of those who need them the most."