It is no secret that bodily injury severities continue to rise significantly faster than the rate of inflation.
Compounding the problem is that frequency is rising as well. Prior to 2015, the industry had taken note of the rising bodily injury (BI) indemnity costs, but took some solace in the declining frequency. With cars becoming safer, these divergent trends made sense in that there should be fewer injury claims, but those that were reported tended to be more serious, hence the rise in the average paid. All of that changed last year when both severities and frequency rose. Now insurers are faced with the increased challenge of being able to properly price for this double whammy.
The good news is that there are steps that can be taken to combat this rise. The bad news is that it requires the full attention of management who must effectively deliver consistency from all front line adjusters in order to get accurate settlements.
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