In a developing market, January’s portal data may suggest new claims at marginally reduced levels, though still close to pre-LASPO peak
24 February 2016
Yesterday’s MI release by the Portal Company of the data for January seems to show a consistent picture across all 4 portals of marginally decreasing volumes of new claims whether the analysis is done on a month-by-month analysis, or on a 12 month cumulative basis. However new RTA claims continue to be at high levels, only 1.4% below the pre-LASPO peak.
In the case of new RTA claims, we saw last month with the release of 3 months’ worth of data that it looked like we had arrived at a position of levelling off of volumes, while casualty claims were showing decreasing trends. There are signs that the trends which had led to last month’s position may be continuing and it is that continuation which is leading to the position which may be emerging from this month’s data.
RTA new claims month-by-month
In January there were 71,000 new claims which is a 13% increase from December’s level when there were 63,000 new claims. But if we compare January’s figure with the average number of CNFs per month over the relatively stable September to November period which was 74,000, then last month’s number is at a level 3,000 or 4% lower.
We expected to see and have always seen an increased number of new claims as between the shorter working month of December, and January. The increase we have seen this year is though the smallest increase in percentage terms over the last 5 years, and the actual number of new RTA claims for January 2016 is the lowest January number over the same 5 year period.
RTA new claims 12 month cumulative
From the pre-LASPO peak in April 2013, we saw 12 consecutive monthly falls on this form of measurement until April 2014, followed by 17 consecutive monthly increases which lasted until a further peak in September 2015 at the level of 880,000. The comparative number in January 2016 now stands at 870,000, that is at a level 1.1% lower than last September.
Over 3 of the last 4 months, this form of measurement has now shown a monthly fall. Measuring new RTA claims on this index, are we starting to move from a position which we judged as static when looking at the data last month, to seeing the first signs of a marginal decrease in volumes? Time will tell on that.
In any event, it is right to see new RTA claims numbers as still being high. On a rolling 12 month basis the current level of 870,000 is only 1.4% lower than the pre-LASPO peak of 883,000 seen in April 2013, when there was a special explanation for that state of affairs. The reality of the currently raised number of new RTA claims is that those volumes have been created by the practices adopted by claimant operations over a period of time and which in turn have led to 17 months of increases in volumes and therefore to what has become the current norm of high volumes.
Explanation for where we are now
If it is right that there is stabilisation or even early signs of marginally reducing portal volumes, then this may be the result of ongoing market disruption on the claimant side onto which the uncertainties it faces additionally from the Autumn Statement are bolted on. If adjustments are taking place in the market then certain claimant operations may be looking for claims with higher prospects of success than they were prepared to accept previously as part of a risk reduction strategy.
Some claimant operations may be filtering out certain categories of claims which are now seen as less attractive, or which are older and therefore more likely to be subject to insurers’ late notification processes. The direction of claims volumes in the future will depend in part on the development of these trends and whether claims which may now be seen as unacceptable by some claimant operations are picked up by others.
Future changes in volumes?
Presumably new claims numbers will soon start increasing post the Autumn Statement announcement, even though there is no sign of that just yet. Perhaps claimant operations are waiting to see what the consultation from the MoJ now due around Easter looks like.
Some claimant commentators are already suggesting action by claimant firms in the meantime, and are recommending planning in case there is implementation in April 2017 rather than October 2017. We have seen advice to claimant firms that is hinged on the basis that it is a good time to take on new claims likely to be affected by the SCT increase, with the need them to lodge them into the portals by the end of November of this year, with a view to them dropping out so that proceedings can be issued by the end of March. The expectation being that this will be sufficient to avoid the SCT increase which they expect will apply to new claims issued after the new law goes live.
The latest quarterly data was released earlier this month and is shown in black lines on the 2 graphs above. The difference between the shapes in which the data is presented is that the first graph shows the data on a quarter-by-quarter basis, while the second graph displays it on a rolling 12 month format. On that cumulative basis the figure has risen for 11 consecutive quarters.
Total vehicle miles continue to increase no doubt related to the improving economy and more recently lower fuel prices. The total number of miles travelled in 2015 was 317.8bn and this was 1.1% higher than the peak seen pre-recession in 2007.
The first graph includes the most recent data which allowing for a delay of a quarter of a year between the number of miles travelled and a potential link with the number of portal claims likely to arise, might suggest increasing RTA claims volumes over the next 3 months due to that factor.
In fact, the position is more complex. While there was a correlation between the rise in vehicle miles and the number of CNFs between April 2014 and September 2015 as both were rising, since then, vehicle miles have continued to increase yet RTA CNFs at first stabilised and now may be showing a marginal fall.
In reality, it seems to be clear that the number of RTA CNFs is affected by a number of factors, but the correlation with the DfT data either in the form of the number of vehicle miles, or indeed the number of RTAs involving personal injury which has remained relatively stable, can only ever be part of the picture.
Casualty new claims month-by-month
The RTA picture is mirrored in the 3 casualty portals.
In the EL portal, there were 4,062 new claims last month, an increase of 17% over December when there were 3,463 new claims. But the January figure is nearly 500 below the September to November average of 4,533.
And also in relation to EL, there was a smaller increase between December and January than 12 months ago, the only realistic comparison available, and the actual January figure for new EL CNFs is nearly 500 less than in January 2015.
As to the PL portal, there were 5,303 new claims in January, an increase of 15% over December when the number was 4,619, but the January figure is 800 below the September to November monthly average of 6,113.
Again, as with EL, PL saw a smaller increase December to January this year than the previous year, and the actual January figure is lower than that seen in January 2015 by over 900.
EL disease shows a similar picture. In January there were 1,400 new CNFs, effectively the same as in December (1,403), and this level is 400 below the September to November average of 1,800.
Comparing the current EL disease picture to that prevailing December to January 12 months ago, there was then a 38% month on month increase, so to see this year no increase between the same 2 months is clearly a change. And the January level of new claims is lower than that seen 12 months previously by over 400.
Putting these sets of data together, a falling number of new casualty claims over the last few months is clear, in fact that fall is easier to demonstrate than in the case of RTA claims.
Casualty new claims 12 months cumulative
Broadly speaking, on this rolling analysis again the same trend of falling new claims volumes is being seen as may be happening with RTA claims, and over a similar period as well.
In the case of EL, the data shows 4 consecutive monthly falls on this method of measurement, with a level now being reached 2% below the peak reached last September.
In PL, where the trend started earlier, there have been 7 consecutive monthly falls on this method of analysis, so that we are now 7% below the peak seen last July.
EL disease continues to show a more complex picture, where new CNFs have been broadly static on this form of measurement over the last 7 months.
Explanations and likely future trends are affected by the same points made above in relation to RTA claims.
The trend towards lower settlements of claims to the RTA portal remains, and while the last 2 months have been 2 of the 3 lowest months for settlements, the last 6 months’ worth of data are showing that we may be reaching a new level involving stable levels of settlement, albeit lower than was seen previously. The 12 month cumulative graph continues to show decreasing levels of settlement, but the rate of decrease is slowing and will continue to do so, we expect, over the months to come.
There is not yet enough casualty data to be able to make a clear analysis of settlement rates in those portals.
The 12 month cumulative data shows what now seems to be becoming a trend of a slightly reducing RTA portal retention rate, moving slowly downwards from 50% 18 months ago towards 45%. This fits with the reducing settlement rates in that portal of course.
The EL and PL 12 month cumulative retention rates remain below 30% and 20% respectively, while the EL disease rate has returned to only 10%, continuing to confirm the need for change to the current process in the handling of disease claims.
Use of Stage 3 remains popular generally for the same reasons as it has over recent years. In RTA there were 4,982 claims reaching that stage in January, where only 3 months have been at a higher level.
In EL and PL there was a surprising fall for use of stage 3 in each when January is compared to December, but usage remains relatively high when a wider comparison is made over a longer period.
The numbers in EL disease are so low to make the forming of any conclusion difficult, for instance there were only 7 such packs prepared in January, but that is not unusual for this portal, and the only marginally higher usage levels were 15 months ago.
We are seeing some increases, no doubt on the back of the 13th edition of the Judicial College Guidelines published last October.
The RTA average settlement level for PSLA was £2,601, the 2nd highest ever, and 1.4% higher than the level seen last November/December. Expect this to increase further over the next few months as the JSG 20% increases for whiplash-type injuries of limited severity becomes more influential.
The EL PSLA average for January was £3,794, the 3rd highest ever, while the PL average was £3,963, the highest ever.
The exception remains the EL disease average where based on the usual low volumes the MI shows a monthly average of £3,651, the lowest ever since that portal opened. The limited success of that portal continues to show reform is needed as the report of the Civil Justice Council Working Group on Noise-Induced Hearing Loss Claims is awaited.
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.