The average cost paid per claim for bodily injury (BI) and personal injury protection (PIP) liability claims increased from 2005 to 2013, even though the frequency of auto injury claims decreased, according to a report issued recently by an insurance industry group.
“Trends in Auto Injury Claims, 2015 Edition,” is the title of the research report issued by the Insurance Research Council (IRC), a division of the American Institute for Chartered Property Casualty Underwriters (The Institutes).
IRC reports that from 2005 to 2013 BI and PIP claims fell nationally by 14.5 percent and 15.6 percent, respectively. This translates to .81 from .94 paid claims per 100 insured vehicles for BI claims, and from 1.49 to 1.25 for PIP (“no fault”) claims.
The average cost per BI claim paid increased by 32.1 percent during that time period, however, from $11,738 to $15,506. PIP claims saw an even greater increase, up 38.2 percent to $8,017 from $5,802. The average cost paid per claim is considered to indicate the severity level of a claim.
The report, based on data taken from national and state-level statistical reporting agencies of private passenger auto insurance claims, reflects national trends, as well as state by state activity. Overall, the IRC documented the following key claims for the time period of 2005 to 2013:
- Declines in BI claim frequency decreases were reported in every state except four (Florida, Kansas, Kentucky and Maryland), and
- PIP claims declined in all states offering PIP coverage, with the sole exception of South Carolina.
During the same eight-year time span:
- Every state except West Virginia experienced a jump in BI claim severity, and
- All but Pennsylvania experienced an increase PIP claim severity.
The increases were significant in some states, according to IRC. Michigan, for example, saw a 72.2 percent jump in PIP claim severity, from $25,997 to $44,756. Other jurisdictions with considerable increases include New York (40.2 percent), Washington (40.1 percent), Oregon (42.3 percent) and the District of Columbia (55.8 percent).
The IRC notes that safety measures adopted over the past few years, including improved motor vehicle safety and graduated licensing laws, have not been enough to prevent overall claims costs from increasing.
“Documenting the specific drivers of cost in the states where cost growth is greatest will be a priority for the IRC in the years ahead,” notes one IRC executive.
The IRC also acknowledges that a recent reported surge in traffic deaths suggests a “change in the beneficial long-term trend of declining claim frequency.”
Click on the link for more information on the IRC report, Trends in Auto Injury Claims, 2015 Edition.