The Surprising Trend in Bodily Injury Liability Insurance Costs Amidst Rising Inflation

The Good News: Bodily Injury Liability Insurance Costs Are Stabilizing

There is a glimmer of good news in the insurance industry that has gone largely unnoticed. The cost of healthcare for severely injured individuals has barely increased over the past year. Bodily injury (BI) liability insurance primarily covers the medical expenses of those severely injured due to the insured's negligence. Historically, the severity of BI claims has closely tracked price changes for inpatient and outpatient hospital services, where severely injured individuals receive treatment and recover. However, recent data from the Bureau of Labor Statistics (BLS) indicates that these price changes have been shrinking significantly.

Healthcare Costs Rising Slower Than General Inflation

According to the BLS, the price change for inpatient hospital services was +1.2 percent in May 2019 compared to May 2018. For outpatient hospital services, the price change was even smaller at +0.9 percent. In contrast, the Consumer Price Index for All Urban Consumers (CPI-U), the most widely-used measure of inflation, rose by 1.8 percent over the same period. The core CPI, which excludes volatile food and energy prices, rose by 2.0 percent. This is a rare occurrence where healthcare costs, particularly for hospital services, are rising at a slower rate than general inflation.

Implications and Recommendations for Consumers

While many factors affect claims for bodily injury liability, this trend is a welcome relief. For consumers, this could mean potential savings on insurance premiums if this trend continues. However, it's essential to stay informed and review your insurance policies regularly to ensure they meet your current needs. Additionally, considering the current economic climate, it might be wise to invest in comprehensive coverage to protect against unforeseen circumstances.