MALVERN, Pa., Aug. 19, 2004 LAWFUEL – Best of the Net for legal news, law news, law articles A new study by the Insurance
Research Council (IRC) finds that people injured in an auto accident who hire
an attorney are less likely to be satisfied with their total payment than
injured people who do not hire an attorney. Almost three-fourths of those
without an attorney were satisfied with their total payment, compared to less
than half of those who hired an attorney. Among people with the highest
accident expenses, who usually incurred the most serious injuries, two-thirds
of those who did not hire an attorney were satisfied with their total payment.
In contrast, among people with the highest losses who retained an attorney,
fewer than four in ten were satisfied. These findings are unchanged from a
similar IRC study conducted in 1998.
The report indicates two factors that may contribute to lower satisfaction
among accident victims who hire an attorney: higher costs — specifically,
attorneys’ fees and medical expenses — and longer settlement times.
Auto accident victims who hired an attorney paid their attorney, on
average, a contingency fee of 32 percent of their total payment. They also
incurred far higher medical expenses than those without an attorney. In 2002,
people with an attorney reported medical expenses that were almost 400 percent
higher than the expenses incurred by people without an attorney. Between 1998
and 2002, average medical expenses grew 100 percent for those with an
attorney, compared to 22 percent for people without an attorney.
Among those without an attorney, 62 percent of those who filed with their
own auto insurer and 40 percent of those who filed with another auto insurer
settled their claims within three months. In contrast, among those who hired
an attorney, 29 percent filing with their own auto insurer and 8 percent
filing with another auto insurer settled in less than three months.
“Attorney involvement is clearly driving up the cost of medical care for
auto accident victims,” said Elizabeth A. Sprinkel, senior vice president of
the IRC. “Yet more medical care for people who hire an attorney evidently
does not always produce satisfaction with the final settlement. Other
factors, such as the timing of the payment, affect how accident victims feel
about the settlement of their claim.”
The new IRC report, Paying for Auto Injuries: A Consumer Panel Survey of
Auto Accident Victims, is based on more than 3,000 responses to a consumer
panel survey of auto accident victims. It was designed to complement Auto
Injury Insurance Claims, the IRC’s recently released study of auto injuries
that is based on more than 70,000 closed auto injury claims collected from
insurers countrywide. The studies have different methodologies and draw on
different data sets; nonetheless, they reach strikingly similar conclusions
about the cost of attorney involvement for auto accident victims.
Both studies also show that, compared to previous studies, medical
expenses for all persons increased even though reported injuries were not more
severe. Payments also rose, with the largest increases going to those with
the most severe injuries. Paying for Auto Injuries, which collected
information about all payment sources claimants used to cover their losses,
demonstrates that the average health insurance payment increased by more than
90 percent; auto insurance payments rose by almost 60 percent; but payment
amounts from government insurance, an at-fault driver, and employer sources
declined. In 2002, claimants received payments from an average of 3.6 out of
9 potential sources, up from 2.4 sources per claimant in 1998.
Paying for Auto Injuries analyzes responses from 3,478 individuals from
2,866 households who experienced an injury from an auto accident between
January 1, 1999, and June 30, 2002. The consumer panel was selected to be
broadly representative of the U.S. population. The survey was fielded in June
and July 2002.
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 irc@cpcuiia.org . Or visit the IRC’s Web site
at http://www.ircweb.org . Copies of the study are available for $250 each in
the U.S. ($265 elsewhere), postpaid from the Insurance Research Council, 718
Providence Road, Malvern, PA 19355-0725. Phone: (610) 644-2212, ext. 7569.
Fax: (610) 640-5388.
NOTE TO EDITORS: 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-casualty 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-casualty organizations.
Web Site: http://www.ircweb.org
