Rising Healthcare Costs Driving Up Auto Insurance Premiums – Don’t Stipulate to Medical Bills in Bodily Injury Litigation

Michael F. Arrigo

Managing Partner, No World Borders, Inc.
LinkedIn: linkedin.com/in/marrigo

Rising Healthcare Costs Driving Up Auto Insurance Premiums Don’t Stipulate to Medical Bills in Bodily Injury Litigation

While inflation and higher repair costs certainly play a role in some premium pressures, my 15 years of experience as an expert witness in usual, customary, and reasonable (UCR) charges for medical bills in personal-injury and auto-liability cases shows that systemic issues in how bodily-injury (BI) claims are valued and litigated are a far more significant driver of rising auto insurance premiums than general inflation.

In many states, 150-year-old precedents under the collateral-source rule and related doctrines prevent juries or arbitrators from hearing evidence of what health insurers or auto carriers actually reimburse for the same services. This leaves inflated “list prices” or “chargemaster” amounts unchallenged as the default valuation methodology. Compounding this, plaintiffs’ counsel in numerous jurisdictions routinely use medical billing liens or letters of protection (LOPs) to route care outside the patient’s health insurance entirely. Providers then bill at full rack rates rather than negotiated insurance rates—often 2–4× higher—knowing the lien will be satisfied from the tort settlement or verdict. These practices artificially inflate the “reasonable value” of medical bills presented at trial or mediation.

Additionally, I routinely see treatment for pre-existing, non-accident-related conditions (degenerative spine issues, prior orthopedic complaints, chronic pain syndromes, etc.) being attributed to the minor auto accident in question. When these unrelated services are bundled into the BI claim without clear causation documentation, the claimed damages balloon—sometimes by tens of thousands of dollars per case. Because these inflated bills become the anchor for settlement negotiations and jury awards, insurers’ loss ratios on BI coverage climb even as overall accident frequency may be stable or declining.

This dynamic—more than raw inflation—is what I see driving the upward trend in BI claims costs that insurers are reporting nationwide.¹ Objective research and industry analyses confirm that rising healthcare costs and medical claim severity are key contributors to higher auto insurance premiums nationwide.²

The result is higher premiums for all drivers, but especially urban, high-risk, and certain-state residents, where these litigation practices are most entrenched.

Both plaintiff and defense counsel serve their clients best when they obtain an independent UCR expert early. I am retained equally by plaintiffs’ firms (to document and defend the true market value of necessary care) and by defense carriers and counsel (to rebut inflated billing). Plaintiff attorneys absolutely have the right—and the duty—to advocate vigorously for their clients. Reasonable, medically necessary charges that are causally linked (based on testimony of medical professionals in an IME report, or others) to the accident and supported by proper documentation and reasonable charges (as assessed by a medical billing expert witness) may be fully recoverable. An objective UCR analysis simply ensures that the recoverable amount reflects what the community actually pays for the same services, rather than an artificial rack-rate figure shielded from market reality.

Particularly in jurisdictions such as New York, where the parties have previously stipulated to the reasonableness of medical bills, counsel on both sides may be leaving significant value on the table if the bills in question exceed $150,000. In those cases, retaining a qualified expert who can opine on the usual, customary, and reasonable (UCR) charges—without any reference to what insurance may pay, consistent with collateral-source rules—frequently demonstrates that the stipulated amounts substantially exceed true market norms. Plaintiffs’ counsel can use this to strengthen and defend a higher (but still evidence-based) demand; defense counsel can use it to negotiate more realistic settlements or prepare more effective cross-examination. Either way, the expert’s testimony stays fully compliant with the jurisdiction’s evidentiary limitations while delivering far greater precision than a blanket stipulation.

For more information on my services as a medical billing expert witness, visit our dedicated page.

Recent tort reform efforts, such as those in Florida, show how states are beginning to address inflated medical billing practices in auto cases.

Insurers can and should continue adjusting underwriting, but the long-term solution lies in greater transparency around medical-bill valuation. Until states modernize the rules of evidence to allow actual reimbursement data (where permissible) or encourage early expert involvement, BI severity will keep outpacing inflation and pushing auto insurance premiums higher into 2026 and beyond. I stand ready to assist counsel on either side in reaching fair, evidence-based resolutions.

Footnotes & Citations

1. Insurance Information Institute (III), Facts & Statistics: Auto insurance (2024 data showing bodily injury claim severity at $28,278).
2. Bankrate (2025), “Rising Healthcare Costs Are Driving Up Your Auto Insurance Rate,” citing CCC Intelligent Solutions data (35% increase in average BI claim payouts Q3 2023–Q1 2025); supported by III studies showing inflation added $76+ billion to personal auto liability losses 2014–2023 and NAIC 2022/2023 Auto Insurance Database Report (liability incurred losses up 9.4% to $120.5B).