A study from the Insurance Research Council (IRC) entitled, "Florida Auto Injury Insurance Claim Environment, 2007 Final Report," concluded that the increased use of diagnostic tests and chiropractic treatment along with an increased rate of lawyer retention by claimants have helped fuel rapid growth in personal injury protection (PIP) claim costs in Florida.
The IRC's study examined detailed claim information from more than 4,000 claims closed with payment during 2005. Ten insurers, representing approximately 60 percent of the 2005 private passenger auto insurance market in Florida, participated in the study.
The study's results show that the average total claimed PIP economic loss, consisting primarily of medical expenses, increased 18 percent from $8,289 in 2002 to $9,769 in 2005. Average claim payments increased 24 percent, from $4,606 in 2002 to $5,712 in 2005.
Among the primary cost drivers was increased use of magnetic resonance imaging (MRI) services, according to the study. The proportion of PIP claimants who had an MRI rose from 26 percent of all PIP claimants in 2002 to 33 percent in 2005. The study also reported that another key cost driver is rapid growth in the cost of computerized tomography (CT) services. The average total CT charge for PIP claimants increased 31 percent, from $2,755 in 2002 to $3,601 in 2005.
The study also pointed to the use and cost of chiropractic treatment as a cost factor. The percentage of PIP claimants receiving chiropractic treatment grew from 33 percent in 2002 to 44 percent in 2005, according to results. The IRC said that the cost implications of this trend were magnified by rapidly increasing charges from chiropractors. Average total chiropractor charges for PIP claimants grew 35 percent over the three-year period, from $4,837 to $6,510.
The IRC's study reported that the growing utilization and cost of diagnostic services and chiropractic treatment contrasted sharply with an apparent decline in the seriousness of auto injuries.
Another important finding from the study is the fact that PIP claimants in Florida hired attorneys more frequently in 2005 than three years earlier. Claimants with attorneys were much more likely to receive chiropractic treatment and to have an MRI than claimants without attorneys. The study also reported that attorney involvement was associated with higher average claimed economic losses and longer times to settle claims. These differences were especially pronounced for claimants whose most serious injury was a neck or back sprain.
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