Trends from today's Portal Company data again pointing upwards
17 April 2015
We predicted further rises in the number of new portal claims in March and the data released by the Portal Company today confirms just that.
This month’s increases in percentage terms are as follows, with the previous 2 month’s increases in brackets:
RTA +10% (Feb -4%; Jan +22%)
EL +7.5% (Feb +5.5%; Jan+22.5%)
PL +7.5% (Feb +2.5%; Jan+19.5%)
EL disease +14.5% (Feb +32%; Jan+39%)
In other words, there has been an almost consistent picture of rising claims numbers over the last 3 months across all 4 portals. The data surely reflects a consistent picture of high levels of activity across the claims spectrum.
Some of the reasons for these increases affect all types of claim; others affect only certain types of claim.
Cold-calling to generate claims
One thing is common across the various claims types is the high level of activity which goes on and which is designed to generate new claims leads. This month, the AA published the results of a survey of more than 20,000 of its members. The survey itself has not been published yet but it is likely to have been relevant to all types of claim, but particularly motor claims.
The survey showed that 63% of AA members contacted had been cold-called by marketing companies on behalf of claims management companies over the past 12 months, and as many as 36% of members had been contacted at least 10 times. In fact, 11% of respondents said that they would claim for compensation even if they had not been injured, surely a relevant factor when it comes to insurers’ responses to increased claims numbers and the need to identify fraud.
The Information Commissioner’s Office
The power to respond rests to problems of nuisance calling rests with the ICO. Until 6 April, the ICO had to show “substantial damage or substantial distress” to intervene on nuisance calls. From 6 April, as part of a government measure to reduce what it now seems to accept needs further measures in response, there is no longer to show substantial damage or substantial distress, and the ICO can take action without.
Its future plans for use of the new power remain unclear, but it now has the chance to take action on these calls where they are unwanted and the calls are looking to generate new accident claims, as well as calls offering boiler replacements and solar panels, which in fact are the most frequent subject areas complained of (accident claims being the 3rd most common complaint).
Even under the old test of “substantial damage or substantial distress”, the company having been the subject of 801 complaints for cold calling, in March the ICO fined Direct Assist Limited £80,000 which had the effect of directly stopping its calls as it promptly went into liquidation.
RTA new claims
The number of new CNFs in March was 81,700, the second highest monthly level ever, the only higher number being the 91,000 in March 2013 in the immediate pre-LASPO period.
In the first 3 months of this year, the number of new CNFs to the RTA portal has averaged 78,000 per month. This is a 12% increase on the average new claims number of 69,650 for 2014, and an increase over the pre-LASPO average of 67,500 of 15.5%.
The effects of MedCo and striking out for fundamental dishonesty
As was the case last month, we have to acknowledge that there is surely likely to have been a significant effect on the data from claimant lawyers looking to beat the deadline for implementation of phase 2 of the reforms introducing greater independence of medical evidence through the MedCo processes which took effect for new CNFs lodged to the portal after 6 April. Indeed, April’s figures when released will still be affected by this aspect as the first week of this month will have been the last chance to avoid this cut-off date.
A clearer picture may therefore come when May’s data is released in June, or at least a couple of months after that, as before then a reduced number of new CNFs should be expected in the immediate period after 6 April as claims will have been lodged earlier than they otherwise would have been, so creating the usual “rain shadow effect” after a period of higher activity.
We well gain a further insight into likely new claims volumes in the longer term once the effects of the hiatus caused by the introduction of MedCo have passed, but there are surely pointers that it would be optimistic to assume anything other than numbers are likely to remain high in the short term, as we wait to see any downward effects brought about by steps such as the establishment of MedCo and the ability now for claims which are fundamentally dishonest to be struck out in their entirety.
Casualty new claims
These 3 portals also show increased volumes on new claims once again. In the case of each of the 3 portals it is the 3rd consecutive monthly rise.
There were 5,143 new EL accident claims last month. These claims are nearly now at a peak – only last October was higher at 5,145.
As to PL claims, there were 6,881 last month, the 4th highest level to date.
With EL disease claims, the position is simple – we are now at the highest level to date.
There is clearly increasing interest in casualty claims on the part of claimant lawyers, but especially disease claims. The relevant factors include the higher level of stage 1 and 2 costs payable in all cases when compared to RTA claims, albeit claims lifecycles are likely to be longer.
But especially in the case of disease claims, the key factor is still the hourly rate costs available outside the portal. The greater interest in these claims since that part of the reforms was introduced in 2013 is now significantly affecting the portal data even though only a small minority of disease claims are put into the portal processes.
Our data currently shows a rolling 12 month cumulative average. On that basis there has been a marginal improvement of the RTA rate to just under 50%. After stabilising last month, the trend on EL and PL claims has slightly deteriorated, while the retention rate for disease cases has improved somewhat. It remains early days on retention rates for all the casualty portals and judgment as to the significance of these results needs to be postponed.
Use of stage 3
The trend previously seen has accelerated this month. With RTA claims, 4,199 went to stage 3 last month, an increase of 16% on the previous month. The number remains double the level 12 months ago, and 4 times the level 24 months ago.
This is the first time that more than 4,000 claims have gone to stage 3 in a month. Taking into account the number of claims settled at stage 2, one claim is now taken to stage 3 for every 4.5 claims settled at stage 2. This is the highest ratio to date of claims using stage 3 when compared to claims settling at stage 2. And this trend is increasing, for as the number of claims concluding at stage 2 is broadly static, the use of stage 3 is on a continuously upward march.
The reasons inevitably surely remain the same, the first of which is the £500 extra costs involved for the claimant in taking a case to an oral hearing at stage 3, the same amount as the stage 1 and 2 costs combined for £1-10k RTA claims.
There is a degree of risk involved in that recovery of the stage 3 costs are not automatic as the claimant must recover more than the insurer’s offer made under the portal process, but the risk will no doubt be reduced to some extent by a suitable quantum assessment being carried out, and perhaps even more by the solicitor then being able to choose the particular court in which he or she issues the Part 8 proceedings to trigger the stage 3 process.
It is too early to see the same effect in casualty claims as few have reached that stage so far, but a similar trend may well be shown when they do.
The RTA figure has stabilised at £2,593. The casualty figures continue to move upwards as slightly larger claims settle as the portals become more established, EL to £3,425, PL to £3,407 and EL disease to £4,959.
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.