Study Finds Skyrocketing Auto Injury Losses Despite Declines in Serious Injuries

A new study by the Insurance Research Council (IRC) finds that reported losses in auto injury claims are escalating in spite of the fact that the rate of serious auto injuries has decreased.

With motor vehicle accidents being the leading cause of occupational fatalities, employers need to be aware of the high cost of the injuries associated with motor vehicle crashes.

In the past five years, increases in the average amounts that auto injury claimants report for expenses stemming from their injuries, particularly among personal injury protection and medical payments first-party claimants, are nearly double the annualized growth in medical inflation. Additionally, they are three times higher than increases in general inflation.

The IRC study, which is based on more than 70,000 auto injury claims collected from insurers countrywide, reveals that while medical costs are escalating, only modest increases have occurred in lost wages and other out-of-pocket expenses associated with injuries. 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.

"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," said Elizabeth A. Sprinkel, senior vice president of the IRC. "However, 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. This is a concern for the public because rising auto injury losses ultimately translate into rising auto insurance premiums."

The IRC study identifies emerging claim patterns associated with medical treatment. In the five-year period from 1997 to 2002:

  • Injury patterns remained consistent, but the seriousness of auto injuries actually declined.
  • 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. In addition, fewer claimants experienced days of restricted activity or missed time from work.
  • Despite declines in the overall seriousness of injuries, the study found increases in the use of some medical professionals - and the costs associated with their use.
  • Increases occurred in the number of different medical professionals visited and in the use of chiropractors, physical therapists, and alternative treatment professionals such as massage therapists. The number of times claimants received treatment from these professionals also increased.
  • The average charges for treatment by these same medical professionals increased considerably.
  • Claimants were more likely to receive more expensive diagnostic procedures using magnetic resonance imaging (MRI) while, concurrently, the proportion receiving X-rays decreased. In addition, the average per-procedure charge for most diagnostics increased.
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