Attorney involvement in auto insurance claims is on the rise and varies significantly by state, according to an insurance industry study.
The percentage of auto injury claimants represented by attorneys jumped to 36 percent of personal injury protection (PIP) claimants in 2012, up from 31 percent in 2007 and more than double the rate found in a similar study in 1977, said the Insurance Research Council (IRC).
The rate of attorney involvement among bodily injury (BI) claimants rose slightly, to 50 percent in 2012.
In 1977, the difference in the attorney involvement between BI and PIP claimants was 30 percentage points (47 percent versus 17 percent). By 2012, the difference shrank to just 14 percentage points, challenging one of the arguments in favor of first-party auto coverages, which is that they result in a less contentious settlement, the IRC said.
The lowest rate of attorney involvement was seen among medical payment claimants (26 percent). The highest rate was in uninsured motorists claims (92 percent), which often involve serious injuries.
The IRC study also examined the factors associated with attorney involvement and found that represented claimants:
- Were much more likely than those without representation to receive treatment in a pain clinic and to undergo magnetic resonance imaging (MRI) for similar injuries.
- Were more likely to be involved in apparent claim abuse.
- Received, on average, lower net payments (total payments adjusted for claimed economic expenses and applicable legal fees) than those who did not hire attorneys.
- Waited longer for payment of claims.
The rate of attorney involvement varied significantly by state. The highest rate of representation was in Florida, where 51 percent of PIP claimants hired attorneys in 2012 — a dramatic increase from 33 percent in 1997.
In New York, 39 percent of PIP claimants were represented, increasing somewhat from 34 percent in 1997. In Michigan, only 13 percent of PIP claimants hired attorneys. In all other no-fault states, the rate of attorney representation increased moderately, from 25 percent in 1997 to 28 percent in 2012. The lowest rate of attorney involvement among PIP claimants in no-fault states was 12 percent, in Kansas.
Among BI claimants, Michigan showed the highest rate of attorney involvement, at 89 percent. Coming in a close second, New York saw 88 percent of BI claimants hire attorneys. Kansas, again, showed the lowest rate of attorney involvement among no-fault states — 34 percent of its BI claimants hired attorneys.
The study also found that claimants injured in accidents occurring in metro areas were more likely than those injured in medium cities, small towns, or rural areas to hire attorneys.
Among BI claimants, 54 percent of claimants in metro areas were represented by attorneys, compared with 45 percent in other areas. Among PIP claimants, the rate of attorney involvement was 44 percent in metro areas, compared with 31 percent in other areas.
“The attorney involvement trends shown in this study undercut two of the envisioned benefits of no-fault auto injury systems: a less adversarial settlement process and more timely payments,” said Elizabeth Sprinkel, senior vice president of the IRC, in a press release. “The role of attorneys is implicated in many of the factors driving up the cost of auto insurance.”
The study, Attorney Involvement in Auto Injury Claims, is based on more than 35,000 auto injury claims closed with payment under the five principal private passenger coverages. Twelve insurers, representing 52 percent of the U.S. private passenger auto insurance market participated in the study.
The complete study is available for purchase on IRC’s website.
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