Study confirms auto injury losses skyrocketing in the U.S.

While it may not come as news to Canadian insurers, a new U.S. study confirms that in that country, auto injury losses are skyrocketing despite a decline in serious injuries due to auto accidents.
The study, by Pennsylvania-based Insurance Research Council (IRC), finds that in the last five years, auto injury claim amounts have grown at double the rate of medical inflation and three times the rate of general inflation.
IRC looked at more than 70,000 auto injury cases, and discovered that the growth in auto injury pay-outs is related to growth in medical costs rather than lost wages or other expenses. “The study points to sharp increases in charges for the treatment of auto injuries and increased use of certain medical professionals and diagnostic procedures as the basis for the rising medical costs,” notes an IRC press release.
Between 1997 and 2002, injury patterns remained constant, while 2002 saw a drop in more serious injuries as a result of auto accidents. Sprains and strains consistently account for 80% of auto injuries.
Chiropractors, physical therapists and alternative treatment providers (e.g. massage therapists) are being used increasingly to treat injuries, and their fees also increased. More extensive diagnosis was also being used, such as MRIs, while the cost per diagnostic procedure also grew.
This trend flies in the face of past figures, which saw bodily injury, medical payments (MP) and personal injury protection (PIP) costs drop between 1992-1997. Since 1997, both MP and PIP costs have grown 7% per annum, versus a 4% rise in overall medical inflation.
“The paradox of increases in auto injury costs associated with higher use of medical resources and escalating medical expenses, despite declines in injuries, suggests that the auto insurance system may be vulnerable to overuse,” says Elizabeth A. Sprinkel, senior vice president of the IRC. “This is a concern for the public because rising auto injury losses ultimately translate into rising auto insurance premiums.”
However, she adds that the study also finds that the system is becoming more efficient at getting money to the most seriously injured victims, where growth in claims payments was highest.