Medical expenses reported by auto injury claimants continue to increase faster than the rate of inflation, in spite of the fact that the severity of the injuries themselves remain on a downward trend.

In a new study, the Insurance Research Council (IRC) found that from 2007 to 2012, the average claimed economic losses—which include expenses for medical care, lost wages and other out-of-pocket expenditures—grew 8% annualized among personal injury protection (PIP) claimants, reaching $14,207 per claimant in 2012.

Among bodily injury (BI) claimants, average claimed losses grew 4%, reaching $10,541 in 2012. Over that same period, measures such as the percentage of claimants who had no visible injuries at the accident scene or who had fewer than 10 days in which they were unable to perform their usual daily activities provided evidence of a continuing decline in the severity of injuries.

The study examines several factors in the growth in medical care costs, including the shift toward more expensive treatment and diagnostic alternatives as well as dramatic increases in billed charges for visits to many types of medical providers. The use of pain clinics, attorney involvement, and claims abuse were found to exacerbate the increases in medical care expenses.

Click on the next page to view total BI payments and a breakdown of PIP-related injury costs for the study period.

“Medical care costs continue to escalate, especially among first-party claimants,” reports Elizabeth Sprinkel, senior vice president of the IRC. “Looking forward, the industry will need to continue its vigilance in contending with these expanding costs, particularly as it monitors the possible spillover effects from general healthcare reform.”

Titled, “Auto Injury Insurance Claims: Countrywide Patterns in Treatment, Cost and Compensation, 2014 Edition,” the report is the seventh of its kind. IRC collected data on more than 35,000 auto injury claims closed with payment under the five principal private passenger coverages to conduct the study. Twelve insurers—representing 52% of the private passenger auto insurance market in the Unites States— participated in the latest iteration. The report shows results about injury, medical treatment, claimed losses and total payments, attorney involvement, and the appearance of fraud and buildup.

For more detailed information on the study's methodology and findings, visit the IRC website.