Looking at insurance-loss trends can be quite baffling at times. Perhaps no more so than when trying to figure out why BI severities continue to rise despite frequency declining at a time when the safest cars ever produced are on the nation's highways.
According to a recent study by the Insurance Research Council, the costs associated with bodily injury claims have exceeded the rate of inflation during the period of 2007-2012. While this is an interesting statistic, perhaps it would behoove us to take a deeper dive into this trend to try and shed some light on what insurers can do to improve outcomes.
When I began my claims career a number of years ago, we faced similar challenges: BI's were adversely trending and fraud was becoming rampant. Certainly fraud remains a culprit for not only BI's but all line coverages. From staged accidents to paper cars, there is no shortage of work for SIU departments from coast to coast. But beyond this are exaggerated claims, which comprise as much as one-third of BI claims, arguably one of the biggest drivers of BI severity.
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