Auto Injury Insurance Claims, Part II

A Dropping Reimbursement Ratio, Part I: Higher Charges, Lower Payments

With all the proof of rising costs that came out in the 2014 IRC report, one would naturally assume that auto accident insurance claims settlements and payouts were rising, as well. Unfortunately, that is not what the data reflects.

The reimbursement ratio has declined steadily since the first IRC study of closed-claims done in 1977. From 2007 to 2012, average claimed medical expenses among Bodily Injury claimants did not just rise—they nearly tripled. But what about the payouts to these claimants who were charged more than a comparable claimant would have been charged in years gone by?

Actual payment per claimant was significantly lower for every type of medical provider—pain clinics, regular MD’s, chiropractors, etc. Among BI claimants, average claimed medical expenses rose from $3,645 in 1997 to $8,138 in 2012. As we reported in The Trend of Auto Accident Cost Increase, the 2012 median charges for CT scans or MRI’s were more than 6 times the charge for a set of x-rays. Tools that cost the care provider more will end up forcing them to raise the injured person’s charges more, and yet, strangely, we have a declining ratio of reimbursement to charges.