Trends on new claims volumes still increasing among latest other portal behaviours
18 August 2015
The trend towards increasing volumes of new claims is supported by the evidence from the Portal Company data for July released today. And the data shows a concerning trend which suggests that even higher numbers lie ahead.
The headline is that the number of new claims into the RTA portal last month reached nearly 82,000. This is the second highest month ever for new claims volumes, beaten only by March 2013 at the height of the pre-LASPO panic as claimant lawyers rushed to take on and then submit new claims before the main part of the reforms took hold.
It is also a substantial increase on last month’s number – the monthly increase is 15.5% over the new RTA claims number for June.
Looking longer term, this is the 15th consecutive monthly increase shown on a 12 month rolling average. New RTA claims volumes over the last 12 months to the end of July now stand at a total of 880k, an increase of 11% over the same figure for the 12 months up to July 2014.
This is the rolling 12 month data on our first graph: Or, cutting the analysis another way, since LASPO, over the June 2013-July 2014 period new RTA CNFs averaged 66k per month, while June 2014-July 2015 they now average 73k per month, the same 11% increase. And July 2015 was the highest month’s figure within the last 12 months, so suggesting the level of annual increase will not stick at 11% but is likely to rise further.
And the month-by-month figures are as follows on this second graph:
You might have thought that of the two potentially most useful sets of data issued by the Department for Transport, the data showing the number of accidents involving injury might show a closer correlation to the number of new RTA CNFs than the data showing the number of vehicle miles travelled.
In fact, it is hard to see a correlation with the DfT injury data. The most recent data of that type is for Q1 of 2015, which we show on our second graph above as applicable for the period up to June 2015, continuing to use an assumed 3 month time lag between accident and CNF being lodged. Q1’s number of accidents involving injury showed a fall as demonstrated on the first graph. We would not though be confident in the present climate of that fall having much of a restraining factor on new RTA claims over the next quarter.
The vehicle miles data continues on an upward trend once again, the most recent data here is for Q2 of 2015 as it is released more quickly. Co-incidence or not, but there is some correlation, at least over the last 15 months, between the number of miles travelled and new RTA CNFs, as shown on the first graph.
Other contributing factors to the rise
There are no incoming developments with the portal process itself to explain the increase in volumes. Insurers may think that the continuing increasing trend confirms that the beneficial effects of LASPO were short lived. While the first graph above shows on a cumulative basis 12 consecutive monthly falls as the initial LASPO effect was felt, the 15consecutive monthly rise since has effectively wiped out that benefit.
The practices currently being used by the claimant lobby to identify potential new claims are not only succeeding in doing so, whatever the quality (or lack of quality) of those being unearthed, but it also seems clear that there is now seen to be enough opportunity for profit in the claims process to justify the level of activity. And it seems to us that the trends being looked at here are likely to lead to the current position deteriorating without further reform in response.
New casualty claims
The data is shown on the third graph below:
EL and PL volumes are up. Sizeable increases:
EL up 8.7% to 5,150 – the highest ever
PL up 7.9% to 6,952 – the 3rd highest ever
But EL disease is down 8.4% to 1,825 – now 32% below the March peak
The same processes being used to identify new RTA claims should be expected to produce new EL and PL claims too.
The position of EL disease will remain different. The number of new EL disease portal claims continues (unlike all 3 other portals) to be no guide to the overall number of disease claims due to the considerable number of excluded claims, at least until process changes from the forthcoming review of issues relating to NIHL/deafness (which could potentially also apply to other types of disease claims) under the Civil Justice Council, take effect.
On the same 12 month cumulative basis as used for RTA above, the picture looks like this for casualty claims on our fourth graph:
The trend shows a stabilised number of new PL claims at around 78k per month, while EL and EL disease continue to edge upwards with stability of volumes yet to be reached.
We show this month on our fifth graph not the cumulative data but on a month by month basis:
There have been increases in retention rates in the RTA, EL and PL portals this month. The EL disease data continues to be on a small sample and it would not be wise to reach definite conclusions from it.
We have identified previously the data revealing the increasing number of claims exiting the portal processes and the concerns arising for insurers as a result where it involves claimant representatives using the exit function exit function on the grounds of what they argue is complexity, often on claims including credit hire, and the fact that sometimes they will exit claims without giving details of the allegedly complex issue.
The trend is most apparent with RTA claims. In July, 16,575 claims exited the process. This was one of the highest months ever for doing so, and was an increase of 11.5% over the previous month, at which time we were looking to see whether objective evidence emerged of this trend. It looks like we now have it.
Excluding months affected by the transfer of claims between claimant organisations such as when there was a change of name perhaps through establishment of an ABS, in the 12 months to April 2015 there were an average number of exited claims of 13,750 per month. We are now 20% above that level with last month’s figure.
Court packs and stage 3
The increased use of this part of the portal process continues. The advantages of increased costs recovery by claimants or their lawyers seem clear from the data.
The RTA number was up a further 2.2%, on top of the 28% increase last month. At 5,289, the number of court packs is again the highest ever.
In fact, over the last 3 months, there have been 14,500 court packs prepared in RTA claims, higher than the entire 12 months up to April 2013.
There are perhaps similar factors working in casualty claims. In PL there were 44 court packs last month, the highest ever. In EL there were 37, not quite as high as the peak the month before. In EL disease there were 10, the highest since January.
The data is shown on the sixth graph below, which also shows PSLA levels.
Of course, especially in RTA, the greater disputes can be around special rather than general damages but the Portal Company do not maintain that data. All we have from them is data for PSLA.
The RTA PSLA levels remain static, as they have been now for 16 months, this last month at £2,587.
PL saw a rise of 3% up to £3,797, while EL was stable at £3,540 and ELD fell 14% to £4,072.
More time and a larger volume of claims will create more stability in the PSLA casualty data, while all PSLA figures including RTA will be affected by the impending arrival of the next Judicial College Guidelines.
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.