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November portal data shows raised monthly claims volumes set against ongoing longer term trends of decreasing volumes but inflationary damages levels

14 December 2016

Release of November’s MI by Claims Portal Limited allows an up to date assessment of market trends in relation to the high volume claims arena.

Summary

The picture in November was of increasing new claims volumes across not only the RTA portal but all casualty portals in addition. This can be attributed at least in part to the additional 1 working day in November when compared to October.

Longer term trends as to claims volumes remain negative across all of the claims types involved in this analysis, though the rate of decline has slowed in EL and there may be signs of this happening too in RTA claims.

Stage 3 usages continues at record levels for RTA and EL, while PSLA trends continue to show inflationary levels of settlement, now standing at 6% per annum for RTA, PL and EL.

New RTA volumes in November

In November there were 70,400 new claims submitted. That is an increase of 4.6% over the number seen in October, and the first time that the 70,000 level has been breached since April. This is the third successive monthly rise as demonstrated on this graph.

Dec 14 1

The new number of 70,400 is now close to the 2015/16 average of 71,491 and in fact is marginally higher than the average for the first 6 months of this year which stood at 70,186.

Over the last 4 years we had seen a fall from October into November: this then is the first year in 5 years where there has been an increase. There could though be a straightforward explanation.

This year there were 22 working days in November, as opposed to 21 in October. Over each of the preceding 4 years it had been the other way round with more working days in October than in November.

Looking at it in a different way, the existence of 1 extra working day as between the months of October and November adds 4.7% of time to the working week, almost identical to the rise of 4.6% seen in the volumes.

So it can reasonably be said that making allowance for that extra working time, volumes per working day have in reality been stable over the last 2 months.

Latest DfT quarterly data shows both marginally increasing vehicle miles travelled and number of accidents causing injury.

 

New RTA volumes in November - weighted for working days

Dec 14 2

This additional graph looks at the number of new RTA claims per working day over each of the months in question. The overall picture is clearly similar to the first graph, as the differences in the number of working days per month impact only around the margins, but comparisons between the graphs can be made for particular months when required.

Looking at the 2 bars on the right edge of the second graph shows that on this weighted basis, what appeared to be a significant difference between RTA volumes in October and November is removed.

But a look at the second graph showing the weighted data also clearly indicates that even taking out of the equation the differences in the length of the working month, more fundamental reasons for the month on month changes clearly exist, linked substantially to ongoing changes in the claimant market including in response to the anticipated Autumn Statement reforms.

New RTA volumes 12 months cumulative

Dec 14 3

The ongoing decreasing trend continues. We have now seen falls in 13 of the last 15 months when the data is measured in this way. With the November data, the actual 12 month cumulative number fell when compared to the level seen in October by 0.34%, from 824,231 to 821,443. This is a slower rate of decrease than the falls of 0.78% and 0.85% seen over the previous 2 months.

Therefore despite the actual monthly increase in new CFAs seen in November when compared to October, the trend is still downwards, which in terms of the maths is a result of the level of new claims being seen in November 2016 falling below that seen in November 2015.

It is worth looking backwards at both the post-LASPO trough of 771,711 seen in April 2014 as well as the subsequent peak seen in August 2015 of 880,462. The falling figures seen on this assessment over the last 15 months have now led to the position where the current number of 821,443 is closer (+6.4%) to the April 2014 low point than it is to the August peak (-6.7%).

The volumes of new claims seen in December 2015 were relatively low, so it remains to be seen whether or not there will be a further fall on this measurement when the December 2016 data is released early next year, when that month’s data will replace the corresponding data from 12 months earlier in this analysis.

New casualty volumes in November

Dec 14 4

New PL claims

In November there were 5,363 new PL claims, a rise of 2.9% over October. The last 2 years have shown a fall between these 2 months, and the fact that there is an increase this year may again be fully explained by the same 4.7% increase in working days.

The current level of new PL claims is 8.4% below the 2015/16 average of 5,857, as well as 2.9% below the level seen over the first 6 months of 2016 which stood at 5,524.

New EL claims

We saw 4,338 new EL claims in November, an increase of 7.6% from October. Again, the last 2 years have shown a drop between these 2 months, so that this year’s increase may be partly but cannot fully be explained by the increase in working days which added 4.7% to working time.

The current level of EL claims is 0.8% below the 2015/16 average of 4,375, but is 2.1% above the average over the first 6 months of 2016 of 4,247, so suggesting a more mixed picture than the negative trends seen with the other casualty portals.

New EL disease claims

In November there were 876 new claims, so we have another casualty increase, this time of 7.2%. Once again the previous 2 years had shown a decrease between these 2 months, but that trend has been broken this year for EL disease too.  The increase in working days will be part but not all of the explanation.

The current level of EL disease claims is 47.4% below the 2015/16 average of 1,665 and 19.6% below the average of 1,090 seen in the first 6 months of 2016.

The much greater degree of decrease seen with EL disease claims when compared to other types of casualty claims continues, but of course a significant proportion of this type of claim continues to be pursued outside the portal.

New casualty volumes 12 months cumulative

The graph below is starting to show a newly recognised trend. While the position in terms of new volumes is steadily decreasing for PL and for EL disease, the rate of decrease for EL accident claims is now nominal only, and may be reversed in early 2017. Contrast the more stable blue bars on the graph below with the steadily decreasing red and green bars.

Dec 14 5

For PL claims, on this measurement we have now seen 17 consecutive monthly falls. The current level of 64,683 is 16.4% below the peak of 77,384 which was reached in April 2015.

In relation to EL, there have now been 10 monthly falls out of the last 12, but the rate of decrease is slowing. The current level of 50,099 is 8.7% below the peak of 54,879 seen in September 2015.

But also with EL, we should note that over the last 4 months the decrease has been only 1.6%, and over the last month that decrease was only 0.1%. It is possible though not certain that December’s figure will show an increase on this measurement (as in fact we have previously seen in 2 months out of the last 12).

As to EL disease, on this approach there have now been 11 consecutive monthly falls. The current level of 12,188 is 47.3% of the level seen at the time of the December 2015 peak of 23,113.

Retention rates

The cumulative 12 month graph providing longer term trends as to retention rates but not including within the definition of ‘retained claims’ those which proceed to stage 3 is showing this picture:

Dec 14 6

 

In November there was a monthly decreased retention rate for RTA claims, but an increased retention throughout each of the casualty portals.

Arguably, stage 3 claims should be seen as falling within the retained claims even though court proceedings are involved, and on this basis the percentages of ‘retained claims’ are clearly higher, as the next graph demonstrates:

Dec 14 7

On this second retention rate graph, the RTA curve does not show the fall demonstrated on the earlier retention rate graph, which in turn is caused by the ongoing increased use of stage 3 which is considered below under the heading of ‘stage3’.

Settled claims

As to RTA claims, month on month settlement rates are shown here:

Dec 14 8

 The position has improved since last month’s lowest ever level.

As to PL and EL accident claims, the corresponding position is shown here:

Dec 14 9

Over the last 12 months, settlement of these two types of casualty claim when added together has remained at between 8,000 and 10,000 per month.

Portal retained claims

The number of RTA claims in the portal and not yet concluded according to Claims Portal data continues to rise and now stands at around 1.1 million. Claims Portal announced late last month that they had started the process of deleting from the system all draft CNFs which had not been submitted to a compensator, but we doubt whether that will in the future impact on this number as these would not seem to be CNFs which have been included in the data. This in turn is because Claims Portal only includes in their definition of new claims those which were not only created but in addition were actually sent to a compensator. 

Dec 14 10

A corresponding graph including PL and EL accident claims shows that claims falling into the same designation grew rapidly to 40,000 and since then have continued to increase in a more measured way and now marginally exceed 50,000.

Dec 14 11

RTA stage 3s and PSLA levels

Stage 3

We saw in November the highest ever number of RTA claims proceeding to stage 3 when the number of court packs rose to 6,797. This is 350 or 5% higher than the previous highest month on record.

Dec 14 12

In November, 16,756 claims settled at stage 2. Putting alongside that figure the number of claims proceeding to stage 3 before concluding, leads to the analysis that currently the level of claims which conclude after following the portal processes through to stage 3 stands at 29% of concluded claims, with 71% settling at stage 2. This is the highest proportion of stage 3 usage seen in settlements to date.

Claimant operations are clearly continuing to be attracted to the use of stage 3 in ever increasing numbers. The level of additional costs recovery especially when an oral hearing is requested by the claimant when compared to stage 2 costs, and what is currently perceived by claimants as the low costs risk in this approach, are both clearly relevant factors.

Insurers continue to need to ensure that they have in place both strategies to mitigate the impact of claimant activities in this area, as well as processes which can meet the portal timelines and ensure that the most appropriate use is made of the potential for settlement at stage 2.

PSLA

The level of PSLA seen in November was £2,720. This is a drop from the high spot of £2,851 which was reached in October. In fact, the likelihood is that October 2016, as was the case with November 2015, will prove to have been an untypical month, as the notch on the graph above demonstrates.

Ironing out the November 2015 and October 2016 blips and looking at longer term trends, November’s figure of £2,720 was still the second highest to date in relation to RTA claims. Since November 2015 when the average PSLA level stood at £2,567, the level of settlements has risen by 6% to its current level.

It is this increase which should be seen as the inflationary effect of the 13th edition of the Judicial College Guidelines. It is against this background that the MoJ’s ‘Reforming the Soft Tissue Injury (Whiplash) Claims Process’ consultation puts forward proposals designed to achieve meaningful change.

Casualty stage 3s and PSLA levels

Stage 3

Similar trends to RTA are seen in EL and PL claims, though to a lesser degree. In EL stage 3 usage reached a new high at 72, though in PL while no new record was set the level remained high at 61.

Only 5 EL disease claims reached stage 3, consistent with the limited operational success of portal processes for that type of claim where the settlement rate at stage 2 also remains low at 64 last month.

Dec 14 13

PSLA

The position with PL and EL claims is similar to RTA.

In both PL and EL the levels of PSLA reached were the 3rd highest seen to date (PL £4,033; EL £4,088) and like RTA have seen a 6% increase since November 2015 which again will mainly be due to the impact of the 13th edition of the Judicial College Guidelines.

The position with EL disease is entirely different as successful usage of portal processes for that type of claim continues to prove problematic. The level reached in November was £3,529. We have only seen one lower month for settlement levels (and that was recent: September 2016) since this portal was up and running, and over the same period since November 2015, PSLA levels have fallen by 13%. This should not be taken as a perceived fall in settlement value of that type of claim, but instead that process reform for disease claims continues to be required.

Contact

For more information please contact Simon Denyer, Partner on +44 (0)161 604 1551 or email simon.denyer@dwf.co.uk

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.

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