Post-holiday season portal data paints a complicated picture
19 October 2015
The portal data for September was released by Claims Portal Limited on Friday afternoon. Last month’s analysis based on the August data highlighted that it was more difficult to reach conclusions when that data was based on temporarily lower levels of activity over a key holiday month. Those holidays having been taken by September, we do at least now have a more secure evidential base to look at.
This time round, the headlines from our analysis of new claims volumes show a more complicated picture than before. In summary, it would be reasonable to say that as far as the RTA portal is concerned, the pointers are still in favour of increasing volumes of new claims, but that the rate of increase is slowing.
As far as the casualty portals are concerned, the position is mixed. New claims numbers in September were predictably higher than in August, but while some of the data shows increasing trends, other data points the opposite way. We should still be cautious though in using the casualty data to support potential conclusions based on the RTA data, because the casualty data is still both relatively immature, and based on much smaller samples.
New RTA claims
In September, there were 74,800 new claims to the RTA portal. The rise over the August data was fully expected. The extent of the increase from August was 9.3%.
Looking back 12 months, the monthly increase in September 2014 as compared to the preceding month of August which we then had of 12.7% was higher than this year, though we should note that September 2014 was one of those months as identified by Claims Portal Limited as being affected by a significant number of resubmitted claims. So that exercise would probably not involve us comparing like with like.
In 2013, the monthly increase in September when compared to August was 8.7%, which has therefore been marginally exceeded by the 9.3% increase seen this year.
So in 2015, we can say that the monthly rate of increase in September when compared to August is the second highest ever, and that the only time it was exceeded was in 2014 when the data was untypical.
12 month cumulative RTA trends
The bar on the extreme right of this graph is marginally higher than it was last month. So we therefore have our 17th consecutive monthly increase on this form of measurement.
But the rate of monthly increases on this cumulative approach seems to be slowing. This month, looking back over the last 12 months, we have seen 883,620 new claims to the RTA portal. Last month, the corresponding number was 882,613 new claims. The reason why the bar on the extreme right of the graph above seems only slightly higher than the preceding month is that the rate of growth is only 1.1%.
It will be informative to see how the picture develops next month and whether, instead of an 18th consecutive monthly increase on the 12 month cumulative basis, we begin to see a position where although volumes remain high, and close to the immediate pre-LASPO peak, there are signs that at least for now, a second peak has been reached.
Over a 12 month period, the annual rate of increase in new RTA claims volumes now stands at 8.7%. Last month the annual increase figure was 10.5%, and the month before it was 11%. The rate of increase seems to be slowing from this matrix as well.
The Institute and Faculty of Actuaries
Since the last portal analysis, we have seen the IFoA publish its interim findings of its upcoming report on third party motor claims. In their report 12 months ago the IFoA had highlighted a reduction in frequency of third party injury claims of 9.9% when comparing 2013 with 2012, which they rightly saw as a consequence of the LASPO reforms and showing a consistent picture with the stats from the portal.
This time round, comparing the calendar year of 2014 with 2013, the IFoA show only a 1.5% increase in motor injury claims, on which they comment that:
“This is less than suggested from the portal where claimant notifications are back to pre-LASPO levels.”
The comparisons between any insurer’s book and the cross-industry portal data is often not a simple exercise, as allowance will have to be made for many variables. The same can be said for the comparison between the portal figures and the IFoA data which is based on 18 of the top 20 motor insurers, but also limited to private car comprehensive experience.
The portal statistics are cross-industry as well as being comprehensive and they remain a strong set of data which can reasonably be used to reach conclusions, in our view.
New casualty claims
After the holiday month of August, all 3 casualty portals show an increased volume of new claims in September. However, in each case, the extent of the increase is less than in September 2014. This month’s new claims figures and the increases are as follows, with the 2014 increases shown for comparison purposes in brackets:
EL 4,707 new claims – up 8.8% (2014 up 13.3%)
PL 6,319 new claims – up 4.7% (2014 up 18.0%)
EL disease 1,917 new claims – up 16.6% (2014 up 23.4%)
12 month cumulative casualty trends
We said in the summary at the start of this briefing that the position was mixed when cumulative 12 month trends were looked at in the casualty context. This can be seen from the following graph:
Comparing the last 12 months up to the end of September, with the 12 months up to the end of August, while EL shows a small increase at 0.2%, PL shows a small decease at 0.1%. EL disease shows an increase of 1.4%.
The small decease in relation to PL can be seen in the tallest bar on the extreme right of the graph above, and is the first fall on this form of measurement since the casualty portals were opened. Perhaps the claims volumes entering the EL and PL portals have reached a peak?
Settled claims in the RTA portal
Looking at the data on a month by month basis the following picture emerges:
The data seems to point to generally lower levels of settlement being achieved in the post-LASPO period than in the times both pre-LASPO, and those when the LASPO reforms were being introduced. Among the 2013 changes were of course, firstly, the reduction in RTA stage 1 and 2 fixed costs from £1,200 to £500 at the end of April 2013, and then the delay in the timing of the payment of stage 1 costs until the stage 2 settlement pack had been delivered which was implemented from the end of July 2013.
While the fact that claimant lawyers would after July 2013 only be paid any costs until submission of the settlement pack might have been expected to create additional momentum towards settlement in the claims process, the reduction in the level of costs payable at stages 1 and 2 by nearly 60% may have had the opposite effect and may have depressed the commercial advantage to settle.
The cumulative 12 month trends showing reduced settlement levels at least in the post-LASPO period can be seen here:
The position this month shows more of what we have seen previously. On a 12 month cumulative basis motor is stable at just under 50%, EL and PL continue to edge downwards at marginally below 30% and 20% respectively, while even using this format of presenting the data to minimise variations, EL disease is still volatile and currently shows a retention rate of only just above 10%.
The issues regarding the suitability of the current portal processes for EL disease claims are well known and will be receiving attention within the current Civil Justice Council review of costs and process for NIHL/deafness cases. Recommendations will be made which may extend to other types of disease claims. However, the decreasing EL and PL retention rates suggest that adaptations of current processes may also be required for those types of claim.
Court packs at stage 3
The bars on the graph below show the continued attraction in the use of stage 3 of the portal process, not least for the additional costs payable.
With RTA claims, there were 5,009 packs produced in September, a rise of 8% over August and the 3rd highest month ever.
There was a similar picture with PL, with 52 packs prepared, the highest ever number, and a rise of 37% over August.
But EL though had only 22 packs, a drop of 27% even when compared to August, and a return to the level last seen in August.
EL disease had only 7 packs produced, and any assessment beyond that would be unhelpful on such a small sample.
The same graph above shows the position with PSLA settlements.
For RTA, last month’s figure was £2,563. This was the 18th consecutive month that the figure has been stable.
In casualty, the position is mixed. EL was at £3,677, the highest ever level. PL was at £3,713, a 3rd consecutive monthly fall. EL disease was at £3,917.
Beyond all of the current portal PSLA data, we now need to look forward, as late last month we saw the publication of the 13th edition of the Judicial College Guidelines. In addition to using the increase in RPI of 3.4% which has been seen in the economy in the 2 years up to the end of April to update PSLA figures, there are specific reorganisational changes in the case of lower value claims in the JCG to take account of. It is the cases affected by this factor which make up a significant part of portal claims.
In particular, a key concern is around how a soft tissue injury to the neck, back or shoulder lasting 3 months has effectively had its value increased by 20% from £1,550 to £1,860. This type of injury will in the context of RTA claims frequently be found in a claim for whiplash, but similar soft tissue injuries will be found in PL and EL as well.
The likelihood therefore is that going forward; the JCG will imminently create an upward momentum on PSLA awards in all claims types. In the case of the mature data we have for RTA claims, we should expect to see in the data a statistically significant across-the-board increase in PSLA figures affecting portal claims lasting for the next 6 months.
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.