Auto Insurance Claim Costs Rising Again

Auto insurance claim costs countrywide have recently increased, reversing previous trends of declining or relatively stable costs.

A new report from the Insurance Research Council (IRC) documents auto injury claim trends, both countrywide and by state, using private passenger auto claim data from national and state-level statistical reporting agencies. Although injury claim severity (the average cost of injury claims) has been increasing steadily in the last several years, much of the increase has been offset by declining claim frequency, which produced relatively stable injury claim costs per insured vehicle, according to the report.

However, recent data indicate that claim frequency, on a countrywide basis, is no longer decreasing. In the case of personal injury protection (PIP) claims, the effect of rising claim severity has been magnified by a simultaneous increase in claim frequency. PIP claim costs per insured vehicle countrywide increased more than 18 percent from 2008 to 2010. For bodily injury (BI) liability claims, the effect of rising claim severity has been mitigated somewhat by stabilization, rather than an increase, in claim frequency. However, 2010 marks the first year since 1994 that BI claim frequency did not decline.