On the heals of Fitch Ratings’ news of improved pricing but declining underwriting performance for personal auto insurers in the United States in 2012 comes a new report from Assured Research that says medical cost-shifting and an aging population could dramatically increase auto insurance costs in the years ahead.

“As health care economics shift in favor of ever-larger institutions, auto insurers may find they have less power to contain prices or utilization,” said William Wilt, president of the firm and author of thereport, “Behind Auto Bodily Injury Severity.” “The age of accident victims is also rising—a dynamic that will magnify the effects of cost-shifting.”

The research firm believes auto insurers are the least well-suited among their insurance peers to contain unit prices or utilization, and older claimants consume more medical services, and at retail prices, those costs will accumulate rapidly.

“Auto insurance costs will rise appreciably in the years ahead, though perhaps not steadily, since the transient influences on cost trends wax and wane over time,” the report states. “But insurers’ massive cost outlays for marketing campaigns and new underwriting tools, such as usage-based insurance, may find new sources of competition for the budget dollar as they accept that the adverse secular trends described in this report are not going away anytime soon.”

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