The average compensation for non-life insurance for physical injuries increased by more than twice as high as the inflation rate from 2010 to 2018, according to a new study from the Insurance Research Council (IRC).
The study, Pattern in Auto Physical Damage Insurance Claims found that average payments increased by 3.7 percent annually during the study period, while the total consumer price index (CPI), as well as the CPI for maintenance and repair of motor vehicles, increased by 1.8 percent on an annual basis.
"Vehicle damage accounts for a growing share of the cost of paying car insurance claims," said David Corum, CPCU, Vice President of IRC. "As vehicle technology continues to evolve, an understanding of the cost drivers behind physical damage claims will be important in addressing issues of availability and affordability of car insurance."
Other results from the study:
- Total losses have become more common and more expensive.
- Disaster claims accounted for approximately one in five dollars paid for large claims. have associated claims for damages.
- The lawyer involvement rate is lower in claims for physical injuries than in claims for personal injuries.
- For most aspects of physical injury claims, there are significant differences between states.
According to the National Association of Insurance Commissioners (NAIC), vehicle claims accounted for 60 percent of passenger car losses in 2016, although the claims cost index – a measure of claims costs relative to claims – declined. Improved passenger protection has contributed to a reduction in the frequency of damages in relation to the number of accidents, which underlines an important reality: improvements in car safety are effective but increase the cost of damages, as they lead to more expensive repairs when accidents occur.
With car damage costs far exceeding inflation, it is worth noting that – as Triple-I previously reported – the increase in car insurance premiums has reduced CPI growth, especially since the COVID-19 pandemic and its subsequent economic downturn have led insurers to $ 14 billion back to policyholders in the form of repayments, premium reductions and dividends.
The study presents conclusions from a collection of more than 220,000 claims closed with payment under the three main private personal injuries covered by claims during claims 2010, 2014, and 2018.
For more information on the study's methodology and results, contact David Corum at (484) 831-9046 or by email at IRC@TheInstitutes.org.