Pointers from yesterday afternoon's Portal figures
Yesterday saw the Portal Company’s January statistics being released and even though we can’t necessarily expect evidence of definitive trends going forward into 2014, they are as always worth studying to identify early signs of trends not only in motor claims but in casualty as well.
The number of new CNFs to this portal in January was 74,700, which is an increase of 18,000 over the previous month of December. As recognised at the time, in the case of December we were dealing with a short month of fewer working days where the number of new claims had historically been lower in previous years. What we were looking for in the new figures we now have is not so much whether they would be increased from December’s level, which was always going to be the position, but what the extent of the increase would be.
Our answer is that with an increase of 18,000 we have a significant rise, but still it’s a predictable one. There is always a rise between the relatively quiet December and the relatively busy January as claimant lawyers catch up. In both 2010/11 and 2011/12 the increase was around 15,000 extra claims, in 2012/13 the increase was 21,000 claims. So with an increase of 18,000 we are mid-range. No easy pointer to future trends from that.
What we do have with the number of new claims of 74,700 is a relatively high number – in fact it’s the 6th highest number of new monthly claims since the portal was born. The only 5 higher months were in late 2012 and early 2013 as the Jackson and portal reforms were imminent and claimant lawyers were taking steps urgently to avoid the downside to both them and to their clients from the new processes. It is though still too early to be deciding where the figure for new CNFs will settle down at as 2014 continues, as we will still probably need most of the first half of the year to see where the new claims numbers are likely to end up. As we move forwards from 31 July 2013, the accident date after which new £10-25k claims had to enter the portal, we must accept that certainly a percentage of the new CNFs entering the RTA system will be in this higher value band, so when we are comparing the monthly total of new claims to the average number of new CNFs of around 70,000 where it stood before the reforms started coming in, there will be an element – small but increasing – of us comparing apples with pears.
But at the end of the day, we have this month breached the 70,000 watershed again. The question remains of whether we will remain at that level as the year progresses, and on that we will we have to wait and see.
Other RTA trends
Two other trends seen last month are continuing significantly. Firstly, the number of court packs being produced has increased again from 1642 in November (1545 in the short month of December) to 1865 as the stage 3 fixed costs continue to look more attractive to the claimant side when set against the reduced level of Stage 1 and 2 fixed costs.
Also, the level of general damages (or PSLA) has risen from £2,400 to £2,414. While not a huge uplift it’s the ninth consecutive monthly increase, one potential reason being the fact that this figure is not only relevant to claimants themselves, but also to their lawyers whose success fees in post 1st April 2013 retainer cases are partly calculated by reference to the amount of PSLA and past losses.
These 3 portals have now been open for 6 months, and so they are still too new to be able to use to identify trends for future new claims volumes. As before this will have to be done by looking at the RTA trends from that more mature process and making assumptions. But there are other trends to recognise and to take account of.
In the casualty portals the numbers of settlements continue to increase. There are now over 200 settled claims across the 3 portals. The average general damages (or PSLA) figures are also raised in all three portals, EL is up to £2,257, EL disease up to £5,208, and PL up to £2,105. The EL and PL quantum levels are likely to rise further as larger claims settle, which is expected to increase these average figures up to and then over the RTA average of £2,414. Another reason for this is the same reason which has been identified as in relation to the corresponding RTA increase in PSLA agreements, that is the increased interest in quantum levels of not only claimants but also their lawyers whose success fees on new post 1st April 2013 retainers are calculated by reference to the level of recovery of past losses including PSLA.
On retention rates, it looks as though last month’s lower figures were a blip, when that month retention rates fell to 44% for EL, 23% for EL disease and 31% for PL, all lower than the previous month. This month the EL retention rate is back up to 49%, EL disease to 30%, and PL to 39%. The overall casualty retention rate is now 41%. The RTA retention rate has generally fallen within the 40-50% range, and we can see that casualty is currently within that band, but we would go further and say that while it will begin to stabilise, it is unlikely to do so at a level which will see it overtake RTA any time soon because in part of the relatively new processes which are still bedding in.
EL disease portal
We expect EL disease to remain the portal with the lowest retention rate, because of the difficulty in using the process successfully for disease cases as the process currently stands. This will drag down the average retention rate for the casualty portals when the figures for the three portals are merged to form a casualty average. If the portal processes were later adapted for disease to allow both more time for decision making, and ensured that a medical report became available before an admission had to be made, then we would expect retention rates to increase as a more appropriate and user friendly process would have been created. Unfortunately there is no sign of that being on the agenda at present.
The limited suitability of disease claims for the portal can be seen from a comparison between the casualty portals of the percentage of the claims dropping out at Stage 1 where a specific decision has been made by insurers not to admit liability (or in terms to repudiate the claim), as opposed to the claim being timed out at Stage 1. In EL accident the percentage of “repudiations” is 57%, in PL it is higher still at 78%, but in EL disease it is only 25%. Perhaps this confirms that the portal processes are not ones within which a positive Stage 1 decision can easily be made in disease claims and again hints at unsuitability of process for disease.
At the same time, the high levels of repudiations in EL accident and PL are worth noting at 57% and 78% respectively. Both are much higher than the current corresponding figure for RTA of 32%. Some robust decision making seems to be on-going as those involved with the EL accident and PL portal processes consider how to operate them most effectively. It is too early to say whether these high EL and PL repudiation rates are realistic. More time is needed to see whether one effect of these higher levels of repudiations is a higher number of these types of claims proceeding outside the portal, including into litigation.
As with most things portal, while there are again this month signs of developments worth studying, it is too early in relatively new processes to be able to guarantee future trends.
We will continue to keep you informed as we move through 2014.
For further information please contact Simon Denyer, Strategic Legal Development Partner, on 0161 604 1551.
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.