---

Auto Injuries Less Severe, IRC Study Reveals

9 June 1999

Auto Injuries Less Severe, IRC Study Reveals

            Study Also Shows Fewer Claimants Are Hiring Attorneys

    MALVERN, Pa., June 8 -- Good news for America's drivers:
auto crashes are resulting in fewer severe injuries.  At the same time, a
lower proportion of injury claims involve lawyer representation.
    These conclusions are based on the analysis of more than 87,000 auto
injury claims by the Insurance Research Council (IRC) in its new study,
"Injuries in Auto Accidents:  An Analysis of Auto Insurance Claims."  The IRC
conducted similar studies in 1977, 1987, and 1992.
    The new IRC study (based on 1997 claim information, the most recent
available) shows fewer severe injuries, along with a decrease in
hospitalization and disabilities associated with auto injuries compared to
1992 and earlier levels.
    More good news:  average claim payouts under bodily injury liability and
personal injury protection declined, reversing a 15-year trend of increases in
the major injury coverages.
    These findings help explain why auto insurance rates have reversed their
upward trend and are actually lower (based on U.S. Bureau of Labor Statistics
data), according to Elizabeth A. Sprinkel, senior vice president of IRC.
    The study also tracked the level of attorney involvement and its impact on
auto injury claims.  It found:

    --  The percentage of injury claims with attorney representation decreased
        from 46 to 41 percent nationally.  It was down significantly in
        several states, including California, Maryland, Virginia, and Ohio.

    --  Claimants without attorneys netted more dollars than claimants with
        attorneys, a major shift since 1992.  Although claimants with
        attorneys received substantially higher gross payments, they lost an
        average of 32 percent to legal fees.  They also had higher economic
        losses, primarily medical expenses, to be covered by their claim
        settlement.

    --  Bodily injury claimants with attorney representation averaged a net
        payment of $708 compared to an average net payment of $1,449 to
        claimants without attorneys.  This is a major change from 1992, when
        claimants with attorney representation netted $101 more than did
        claimants without attorneys.

    --  Claimants without attorney representation received payments more
        quickly than did claimants with attorneys.

    Commenting on the results of IRC's new study, Sprinkel said, "After years
of escalating injury claim frequency and costs and increasing attorney
involvement in the injury claim settlement process, these trends have
stabilized and, in some cases, reversed.  Efforts by insurers, state and
federal legislators, consumer groups, auto manufacturers, and others to reduce
injuries and costs associated with auto crashes seem to be having a positive
effect."
    Sprinkel credited the following factors for helping reverse the trends of
more serious injuries and higher claim costs during the 1980s and early 1990s:

    --  Seat belt use laws
    --  Better seat belt, air bag, and passenger compartment design
    --  Campaigns against drinking and driving
    --  Intensified fraud investigation
    --  Insurer investment in technology to streamline claims review

    The improvement in claims costs has contributed to lower auto insurance
rates, according to Sprinkel.
    "Statistics from the government (U.S. Bureau of Labor Statistics) show
that auto insurance rates declined in 1998 for the first time in 25 years,"
Sprinkel said.  "Nationally, auto insurance rates dropped less than one
percent.  But some major markets such as California, New York, Florida, and
Massachusetts had more dramatic decreases."
    The IRC study, "Injuries in Auto Accidents:  An Analysis of Auto Insurance
Claims," is based primarily on an in-depth review of 87,193 private passenger
auto injury claims that closed during the spring and summer of 1997.  The
study focuses on claims paid under the five principal injury coverages:
bodily injury liability, personal injury protection, uninsured motorist,
underinsured motorist, and medical payments.  Forty leading insurers,
representing 67 percent of the private passenger automobile market in the
U.S., participated in the study.
    For more detailed information on the study's methodology and findings,
contact Elizabeth Sprinkel by phone at 610-644-2212, ext. 7568; by fax at
610-640-5388; or by e-mail at sprinkel@cpcuiia.org.  Or visit IRC's Web site
at http://www.ircweb.org.  Copies of the study are available at $35 each in the U.S.
($50 elsewhere) postpaid from the Insurance Research Council, 718 Providence
Rd., Malvern, Pa. 19355-0725. Phone: 610-644-2212, ext. 7569.  Fax:
610-640-5388.

    The Insurance Research Council is a division of the American Institute for
CPCU and the Insurance Institute of America.  The Institutes are independent,
nonprofit organizations dedicated to providing educational programs,
professional certification, and research for the property and liability
insurance business.  The IRC provides timely and reliable research to all
parties involved in public policy issues affecting insurance companies and
their customers.  The IRC does not lobby or advocate legislative positions. It
is supported by leading property and liability organizations.