Cost Comparison. (Property/Casualty).Increases in the cost of physician services, hospital room rates, legal costs and auto-body repair expenses continued to outpace out·pace tr.v. out·paced, out·pac·ing, out·pac·es To surpass or outdo (another), as in speed, growth, or performance. outpace Verb [-pacing, the general rate of inflation, keeping the price indexes for most of property/casualty's major lines above the consumer price index in 2000. This article presents an update of the Masterson Mas·ter·son , William Barclay Known as "Bat." 1853-1921. American frontier marshal and journalist. Famed for his exploits as an army scout, gambler, and law enforcer in towns such as Dodge City and Tombstone, he was later a sports writer for Indexes, detailing the annual average cost indexes for property/casualty coverage from 1990 through 2000, plus a forecast for 2001. The annual changes in the indexes are shown in the table, "U.S. Claim Cost Indexes, Annual Percentage Increases." A property/casualty insurer's claims settlements are directly affected by economic factors as they relate to price, salary and wages. In economic terms, claim costs for loss and loss-adjustment expenses are the insurer's cost of production. Insurers' major costs include physician services and other medical expenses; hospital care and rehabilitation rehabilitation: see physical therapy. ; lost time and wages; automobiles, including repairs and parts; building materials Building materials used in the construction industry to create . These categories of materials and products are used by and construction project managers to specify the materials and methods used for . and construction labor; and personal effects personal effects n. an expression often found in wills ("I leave my personal effects to my niece, Susannah") personal effects (things) include clothes, cosmetics, and items of adornment. . The components for loss-adjustment expenses are those incurred by insurance companies in settling claims, such as lawyers' fees and other legal and court costs court costs n. fees for expenses that the courts pass on to attorneys, who then pass them on to their clients or, in some kinds of cases, to the losing party. . During the 10 years since 1990, the individual indexes for physician services, hospital services, legal costs and auto-body work have exceeded the consumer price index for all items. These are key components in claim costs for the casualty insurance lines, so it follows that those lines experienced claim cost increases considerably higher than the general rate of inflation. The graph, "Yearly Increase in Costs by Line," shows the annual change in the price level for property, liability and multiperil lines from 1991 through 2000. Price increases for property and multiperil have stayed between 2.8% and 4.2% over the period, with property increases of 4.2% for 2000. The preliminary estimate for 2001 shows a lower increase. Liability price increases gradually declined from 6% in 1991 to 3.87% in 1995. After being flat for the next three years, liability price increases turned up in 1999 and 2000. For 2001, liability prices are estimated to rise 4.91%, a slightly lower increase than in 1999 and 2000. From 1991 to 1999, the increases for physicians' services costs dropped from 6% to 2.1%, before increasing 3.7% in 2000. The increases in hospital room costs fell from 9.4% in 1991 to 3.2% in 1997 and 1998, before increasing 4.1% in 1999 and 6% in 2000. The lower rate of increases reflects the strong efforts in recent years to control medical treatment costs, but the effect of these declines on liability and workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. insurance costs may be reversing, as the effects of cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. run into natural limitations. Also, this effect was seen in larger increases in health insurance costs in the last two years. Both physician and hospital costs show larger increases in the preliminary figures for 2001. While increases in legal costs were less than 3% from 1992 through 1995, these costs also have shown larger increases, with a 7.1% increase in 2000 and an estimated 5.4% increase expected in 2001. The average annual increases in costs for several major lines for the five-year periods of 1990 to 1995 and 1995 to 2000, as well as the two-year period from 1998 to 2000, are shown in the table, "Average Annual Increases--U.S. Claim Cost Indexes." The general patterns of lower increases in costs for the liability lines and flat trends for the property lines are repeated in the figures for the individual lines. But the latest two years are not consistently below the latest five years, again indicating that cost inflation may have flattened flat·ten v. flat·tened, flat·ten·ing, flat·tens v.tr. 1. To make flat or flatter. 2. To knock down; lay low: The boxer was flattened with one punch. or even begun to grow. These indexes don't don't 1. Contraction of do not. 2. Nonstandard Contraction of does not. n. A statement of what should not be done: a list of the dos and don'ts. measure "social" inflation, which encompasses changes in attitudes toward litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , changes in jury attitudes, new theories of liability and the push toward larger settlements given by large punitive pu·ni·tive adj. Inflicting or aiming to inflict punishment; punishing. [Medieval Latin p  n damage awards.Editor's Note Editor's Note (foaled in 1993 in Kentucky) is an American thoroughbred Stallion racehorse. He was sired by 1992 U.S. Champion 2 YO Colt Forty Niner, who in turn was a son of Champion sire Mr. Prospector and out of the mare, Beware Of The Cat. Trained by D. : This article presents an update of a family of price indexes for major business lines written by property/casualty insurers. Originally developed in the 1960s by consulting actuary actuary One who calculates insurance risks and premiums. Actuaries compute the probability of the occurrence of such events as birth, marriage, illness, accidents, and death. Norton Nor·ton , Charles Eliot 1827-1908. American educator, writer, and editor who founded the Nation (1865). E. "Doc" Masterson, the "Masterson Indexes" were first published by A.M. Best Co. in 1968. William William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack R. Van Ark is a consulting actuary. Questions or comments regarding the indexes should be directed to him at Michigan Michigan (mĭsh`ĭgən), upper midwestern state of the United States. It consists of two peninsulas thrusting into the Great Lakes and has borders with Ohio and Indiana (S), Wisconsin (W), and the Canadian province of Ontario (N,E). Professional Insurance Exchange, 4792 Pinnacle pinnacle (pĭn`ĭkəl), minor architectural motif of vertical tapering shape, usually crowning a pier, buttress, or gable. Although sometimes it appears in Renaissance design, as in the Certosa di Pavia, it is almost exclusively a medieval Court SW, Wyoming Wyoming, city, United States Wyoming, city (1990 pop. 63,891), Kent co., W Mich., in the greater Grand Rapids metropolitan area, on the Grand River; settled 1832, inc. 1959. , MI 49509. Mr. Van Ark also can be reached by e-mail at vanarkb@hotmail A Web-based e-mail service from Microsoft that is available free or paid, based on message storage and attachment capacity, security and other features. Originally developed by Hotmail Corporation and acquired by Microsoft in 1998, Hotmail became the fastest growing e-mail service on the .com. [Graph omitted]
U.S. Claim Cost Indexes, Annual Percentage Increases
Cost indexes for most of the major property/casualty lines remained
above the consumer price index in 2000.
Coverage 1990 1991 1992 1993 1994 1995 1996
Auto Bodily Injury 6.91% 6.58% 6.35% 5.97% 4.88% 4.84% 3.89%
Auto Property Damage 4.60% 5.28% 3.90% 4.36% 4.24% 3.70% 3.80%
Auto Physical Damage 3.26% 4.13% 2.95% 3.40% 3.94% 3.02% 3.75%
Composite, Auto 5.22% 6.19% 5.19% 7.36% 4.48% 3.47% 1.78%
Workers' Compensation 7.31% 5.60% 5.42% 4.86% 2.56% 1.65% 3.71%
Other Bodily Injury 6.46% 5.76% 6.78% 6.13% 4.81% 3.85% 3.85%
Other Property Damage 1.79% 5.34% 4.16% 3.93% 4.17% 2.77% 3.29%
Burglary & Theft 1.52% 1.49% 5.25% 4.72% 4.45% 1.22% 4.51%
Boiler & Machinery 2.81% 3.43% 4.30% 3.98% 3.06% 0.27% 1.82%
Fire 0.76% 3.00% 2.18% 4.11% 3.57% 1.76% 3.10%
Allied Lines 0.83% 2.56% 2.82% 3.52% 3.63% 1.90% 2.87%
Homeowners 4.16% 3.85% 3.57% 3.51% 3.14% 4.22% 2.92%
Commercial Multiperil 1.82% 3.73% 3.37% 4.50% 4.09% 2.13% 3.52%
Inland Marine 1.97% 4.54% 4.13% 3.21% 3.51% 3.45% 3.83%
Composite, All Items 4.91% 4.21% 5.47% 4.20% 3.85% 3.20% 2.38%
CPI (**), All Items 5.40% 4.21% 3.01% 2.99% 2.56% 2.83% 2.95%
Coverage 1997 1998 1999 2000 2001 (*)
Auto Bodily Injury 3.96% 3.90% 4.48% 5.03% 5.43%
Auto Property Damage 3.38% 3.38% 3.43% 4.31% 4.40%
Auto Physical Damage 3.02% 3.19% 2.47% 4.10% 3.55%
Composite, Auto 3.61% 3.63% 1.63% 4.66% 4.73%
Workers' Compensation 3.83% 4.23% 3.82% 4.65% 4.20%
Other Bodily Injury 4.03% 4.00% 4.85% 4.37% 5.35%
Other Property Damage 4.00% 3.18% 3.62% 3.96% 4.06%
Burglary & Theft 3.80% 3.32% 5.20% 4.00% 4.46%
Boiler & Machinery 4.89% 2.27% 2.96% 1.39% -0.96%
Fire 4.27% 2.28% 2.62% 4.66% 2.52%
Allied Lines 4.25% 2.27% 2.68% 3.74% 2.51%
Homeowners 3.24% 3.03% 3.75% 4.13% 3.36%
Commercial Multiperil 4.41% 2.96% 3.17% 2.78% 3.16%
Inland Marine 3.28% 2.83% 4.94% 3.52% 3.65%
Composite, All Items 3.73% 3.54% 2.72% 4.63% 4.31%
CPI (**), All Items 2.29% 1.68% 2.08% 3.36% 3.39%
(*)Estimated
(**)Consumer Price Index
Average Annual Increases--U.S. Claim Cost Indexes
The average annual increases in costs show a general pattern of lower
cost increases for the second half vs. the first half of the decade, but
cost increases generally have been flat or have trended higher in the
last two years, except for commercial multiperil.
5-Year 5-Year 2-Year
Increase Increase Increase
Coverage 1990-1995 1995-2000 1998-2000
CPI, All Items 3.12% 2.47% 2.72%
Auto Bodily Injury 5.72% 4.25% 4.76%
Auto Property Damage 4.29% 3.66% 3.87%
Auto Physical Damage 3.49% 3.31% 3.29%
Workers' Compensation 4.01% 4.05% 4.23%
Other Bodily Injury 5.46% 4.22% 4.61%
Other Property Damage 4.07% 3.61% 3.79%
Homeowners 3.66% 3.41% 3.94%
Commercial Multiperil 3.56% 3.37% 2.97%
Decennial Cost Increases
Base index, 1982-1984 = 100
Indexes
Cost for: 1990 2000 Increase
CPI, All Items 130.7 172.2 31.75%
CPI, Physicians Services 160.8 244.7 52.18%
CPI, Hospital Services 175.4 307.0 75.04%
Legal Costs 154.2 217.6 41.10%
CPI, Auto Body Work 135.9 187.8 38.19%
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