You are right Dave. It doesn’t take a rocket scientist to figure this out. Attorneys can advertise and the ambulance chasers do TV ads about how much they can get an injured claimant. Some even have ads showing staged accidents, particularly truck accidents which are often more costly. Lawyers are the scourge of the earth. No wonder so many get into politics to do even more damage.
This is an eight year span (9 years if they included the initial year). That is a 3% increase per year if 9 years, 3.5% if 8 years. In other words, this is cost of living increases. Medical inflation has been higher than 3 to 3.5%, so this is easily explained. You cannot look at the change over that span and just compute the difference. Looks to me like the lawyers are not performing as well as thought.
Claims costs can also rise due to how expensive it is to fix a car’s damage. These newer cars are very expensive and any damage is not fixed, but completely replaced. Take a look at a bumper assembly claim sometime including labor, paint, EPA disposal charges and we can see how expensive everything has gotten.
Has a former litigation manager and SIU manager for a large insurer, I would suggest we explore the claims process. As the trend for consolidation continues, more and more claims are handled by teams and often by adjusters and managers who have no “on the ground” experience. An evaluation of payment vs. expense is made on questionable injury claims and often a settlement offer is made vs. litigating. The problem with this is the short-sightedness. The injury “mill” attorneys recognize and capitalize on this process. In the end, it costs insurers far more money then they save, it costs insured’s an “at-fault” accident rating that may be inaccurate, and it impacts agents with higher than necessary loss ratios. Please keep in mind, I am not speaking about injury claims that are accurately evaluated and paid.
Marie, I agree with you on your post. I can’t tell you how many times I have seen a company make the decision to settle rather than fight when our insured is right. Some company attorney will say, what will it take to make this go away and then offer a settlement? It is not popular with the insured since it goes on their record as an at fault accident. Then, the underwriter jacks up the rates on the renewal because of the claim. I know company’s have the right to settle as they see fit and they don’t like defense costs, but it gets a little wierd at times.
On the flip side, if the insurer fought the good fight, and won, what was the ultimate cost? You think defense is free? Part of the financial picture is the cost to do business, which includes defending frivolous claims that are borderline fraudulent. A decision must be made whether it’s actually in the best interest of the insured to write that check to the ambulance chaser when it generally will cost less than the defense. If you think the insurer just eats the cost of defense without passing it to the consumer, you couldn’t be more wrong. A great insurer that does this the proper way can bring their loss ratios down to under 40%, and THAT is what saves premium for our customers. I know this because I work for one.
Most times, being “right” is the absolute WRONG thing to do for the insured.
Instead of vilifying the insurance company for busting their rears to protect their insured’s interest, try focusing on the problem: those leeches out there preying on the greed and ignorance of people looking for a winning lottery windfall from a bumper scratch.
Until there’s more reform and more penalties by the Bar against ambulance chasers when a frivolous claim is identified, this trend will likely continue.
“If Auto Injury Claims Frequency Is Falling, Why Are Claims Costs Rising?”
Lawyers
You are right Dave. It doesn’t take a rocket scientist to figure this out. Attorneys can advertise and the ambulance chasers do TV ads about how much they can get an injured claimant. Some even have ads showing staged accidents, particularly truck accidents which are often more costly. Lawyers are the scourge of the earth. No wonder so many get into politics to do even more damage.
This is an eight year span (9 years if they included the initial year). That is a 3% increase per year if 9 years, 3.5% if 8 years. In other words, this is cost of living increases. Medical inflation has been higher than 3 to 3.5%, so this is easily explained. You cannot look at the change over that span and just compute the difference. Looks to me like the lawyers are not performing as well as thought.
Claims costs can also rise due to how expensive it is to fix a car’s damage. These newer cars are very expensive and any damage is not fixed, but completely replaced. Take a look at a bumper assembly claim sometime including labor, paint, EPA disposal charges and we can see how expensive everything has gotten.
That’s true, but this article is specifically talking about injury claims.
I did say “also” in my comment. We all know about injury and what drives it. Lawsuits and Medical Costs.
Has a former litigation manager and SIU manager for a large insurer, I would suggest we explore the claims process. As the trend for consolidation continues, more and more claims are handled by teams and often by adjusters and managers who have no “on the ground” experience. An evaluation of payment vs. expense is made on questionable injury claims and often a settlement offer is made vs. litigating. The problem with this is the short-sightedness. The injury “mill” attorneys recognize and capitalize on this process. In the end, it costs insurers far more money then they save, it costs insured’s an “at-fault” accident rating that may be inaccurate, and it impacts agents with higher than necessary loss ratios. Please keep in mind, I am not speaking about injury claims that are accurately evaluated and paid.
Marie, I agree with you on your post. I can’t tell you how many times I have seen a company make the decision to settle rather than fight when our insured is right. Some company attorney will say, what will it take to make this go away and then offer a settlement? It is not popular with the insured since it goes on their record as an at fault accident. Then, the underwriter jacks up the rates on the renewal because of the claim. I know company’s have the right to settle as they see fit and they don’t like defense costs, but it gets a little wierd at times.
On the flip side, if the insurer fought the good fight, and won, what was the ultimate cost? You think defense is free? Part of the financial picture is the cost to do business, which includes defending frivolous claims that are borderline fraudulent. A decision must be made whether it’s actually in the best interest of the insured to write that check to the ambulance chaser when it generally will cost less than the defense. If you think the insurer just eats the cost of defense without passing it to the consumer, you couldn’t be more wrong. A great insurer that does this the proper way can bring their loss ratios down to under 40%, and THAT is what saves premium for our customers. I know this because I work for one.
Most times, being “right” is the absolute WRONG thing to do for the insured.
Instead of vilifying the insurance company for busting their rears to protect their insured’s interest, try focusing on the problem: those leeches out there preying on the greed and ignorance of people looking for a winning lottery windfall from a bumper scratch.
Until there’s more reform and more penalties by the Bar against ambulance chasers when a frivolous claim is identified, this trend will likely continue.