Approaching Civil Liability Act reforms trigger new trends of decreasing claims volumes alongside change of claimant priorities from quantum to costs
The release of the Claims Portal data for April allows a further review of current trends with the Civil Liability Act and associated Small Claims Track reforms now being expected to be 12 months away.
New claims intakes in April were down across the board. The reductions were 10.3% for RTA, 14.1% for PL, 8.2% with EL and 10.9% in the case of EL disease. This will at least be linked to a reduction in working time around the Easter Bank Holidays and other holidays taken at that time of year as new case intakes are usually reduced between March and April.
Longer term trends seem though to be pointing downwards across the board too. Assuming the reforms are 12 months away then it would be logical that a further impact would be being felt. RTA and PL are both down for the 5th consecutive month, EL for the 4th consecutive month, while EL disease has been pointing down for over 3 years. Earlier trends pointing to relatively stable levels over the last year or so particularly for RTA and EL may now be at an end.
The use of stage 3 is reduced across the board as well. The comparative use of stage 3 hearings compared to stage 2 settlements is reducing back below 30% for RTA claims as claimant operations appear to being shifting focus away from damages towards costs and disbursements.
The data as to PSLA levels points to the same conclusion. This can best be seen in the case of RTA claims where average general damages fell for the 4th consecutive month. The current level of £2,808 is now only 0.9% above November 2017 when the 14th edition of the Judicial College Guidelines began to impact.
New RTA claims in April
April 2019 saw 52,777 new RTA claims; that is a fall of as much as 10.3% from the 58,854 which were submitted in March.
A decrease at this time of year should not be unexpected as it is often seen between March and April. In 2018, there was a decrease of 6.6% and in 2017 a much larger fall of 23.3% whereas in 2016 there was a small increase of 1.1%.
April 2019, with the exception of April 2017, saw the lowest number of new RTA claims for that month of the year since the portal opened. April 2019 was 3.5% lower than April 2018, 1.7% higher than April 2017, but 26.2% lower than April 2016.
After four months of the calendar year 2019 the current average monthly RTA claims intake is now 57,945. That is 0.5% lower than the annual monthly average for 2018 of 58,244. It is also a 1.3% reduction from the average for the first four months of 2018 which stood at 58,707. These are potential omens of a decreased number in the current calendar year.
New RTA claims in April – time weighted
Discounting for the Easter bank holidays, there was a 4.8% reduction of working time in April. This represents 20 working days set alongside the 21 in March. Individuals working at claimant operations are likely to have taken more holidays in the month of April as opposed to March and this is likely to account for an increased percentage of reduction in working time, which may in turn explain the fact that the 10.3% reduction over the month is greater than the drop off in working time.
There were therefore 2,639 new RTA claims per working day during the month of April, a reduction from the 2,803 per day during March.
The graph above shows that March represented a decrease in claims per working day when March was compared to January and February. The same reducing trend is repeated in April.
The current number of claims per working day is now substantially closer to 2,500 as opposed to 3,000, a level last exceeded in the early months of 2017.
New RTA claims over the longer term
Looking at the 12 month cumulative data for longer term trends, we see from the graph above a small reduction over the month from 695,474 to 693,590 – a fall of 0.3%.
It could be argued that the current level is probably still just within the relatively stable picture which we have seen now for 13 months, having begun in March 2018, though over that period, there have now been seven monthly decreases to be set alongside six monthly increases.
We were able to say before this month's data that the variation over the previous 12 months was so limited that the figures all fitted within a range of 1% or 6,500, between 694,500 and 701,000. The current figure of 693,590 is therefore almost 1,000 below the bottom of that range.
The possibility is now that the former period of stability has ended and that we are now moving towards a new further decreasing trend. We will however need further months' data to be able to identify whether or not that is the case for sure. It is worthwhile noting and indeed it may be important that this is the fifth consecutive month where a decreasing number has been shown and further that this month's number shows a larger reduction than in any of the prior four months.
We commented previously that the stability over a 12 month period seemed to show at the time that the claimant market had come to terms with the incoming reforms still expected in April 2020 from the Civil Liability Act and the associated Small Claims Track reforms. If there is to be a further decreasing trend ahead as seems now likely it will presumably be because the market needs to adapt further in the face of those incoming reforms.
Comparison with annual portal and CRU data
The graph above shows the annual portal data over years up to 31 March and is the same graph presented last month. The end of year total for 2018/2019 at 696,258 was only 2,596 lower than the 698,724 seen in 2017/2018, a fall of 0.4%. For two consecutive years, the figure had been just short of 700,000, noting that as the data was originally presented, the 2017/2018 figure had in fact been 700,008 before those numbers were corrected by Claims Portal.
Clearly April 2019's number is only the very first month of the new accounting year. If though it proved representative, then it would suggest an annual total of 633,324. This would equate to a reduction of 9.0%. It would be reading far too much into one month's data to suggest that will be the result when the final month of 2019/2020 is available in April next year.
The extent of any further reduction between 2018/2019 and 2019/2020 is likely to be smaller than 9.0%. We await further months' data to be able to check the position. If in fact there is a reduction between the two years then again, this is presumably linked to preparation by claimants for the incoming reforms expected in April 2020.
In terms of comparison with annual CRU data, we saw, as depicted in the graph above, a similar consistency between 2017/2018 and 2018/2019 with most the recent annual figure being 660,608. That figure stands broadly midway between the portal figure for 2018/2019 at 696,258 and what we have seen as a very early possible portal figure for 2019/2020 of 633,324.
Further comparison between likely portal RTA new claims data for 2019/2020 and comparative figures for 2018/2019 will need to be postponed a number of further months.
New casualty claims in April
There were 4,054 new PL claims submitted in March. This equates to a 14.1% reduction from the 4,722 seen in March. As with RTA claims, this is significantly a greater decrease than the reduction in working time of 4.8%.
Reductions between March and April have been also seen in the three previous years. In 2018 the reduction was 3.3%, in 2017 it was 28.9% and in 2016 it was 4.7%.
The current level is the lowest intake for PL claims in the month of April since the casualty portals opened. This April's number was lower than in April 2018 by 13.1%, it was less than in April 2017 by 1.7% and below April 2016's number by 26.2%.
The current average new PL claims intake for the calendar year 2019 is now 4,527. This is 5.8% less than the 2018 monthly average of 4,806 and is also 7.5% below the average for the first four months of last year, standing at 4,893.
There were 3,475 new EL claims in April, an 8.2% reduction from the 3,786 in March. Again, the reduction is greater than the loss of working time.
As between March and April we have always seen falls in the EL data as well. The decrease was 0.1% in 2018, a much larger 25.9% in 2017 and was 3.7% in 2016.
With one exception, 2017, just as with RTA claims, this is the lowest number of new EL claims in any month of April. The current total is 11.5% less than in 2018, 3.2% greater than in 2017 and 19.3% lower than in 2016.
The calendar year 2019 to date now shows a monthly average of 3,699 new EL claims. This is a reduction of 3.8% from the 2018 average of 3,847 and is also 7.7% less than the average for the first four months of 2018 which stood at 4,007.
EL disease claims
In April there were 384 new EL disease claims, a reduction of 10.9% from the 431 which were submitted in March.
There is usually a reduction as between March and April in the case of EL disease as well. In 2018 the fall was 23.2%, in 2017 it was 25.7% and in 2016 it was 10.8%.
The current level is the lowest for any April since the casualty portals opened. The current total is 27.1% less than in April 2018, 45.1% lower than in April 2017 and 60.9% below the level seen in April 2016.
The average intake for EL disease claims in 2019 to date now stands at 434. This is 16.1% less than the 517 average for the calendar year 2018 and it is also 33.3% lower than the average for the first four months of last year at 651.
New casualty claims over the longer term
Looking at longer term trends on the 12 month cumulative data, including the figures up to the end of April, we now see 56,086 PL claims submitted during the previous 12 months. This represents a 1.1% decline over the month from the previous level at the end of March, which was 56,697.
This is the fifth consecutive month of decline. We have moved from a picture of relative stability to one of further decline.
The rate of decline has increased. Between April 2017 and April 2018 the decrease was 2.3% whereas over the last 12 months it rose to 4.4%.
The position is similar with EL claims. On the same 12 month cumulative basis, the level as at the end of April now stands at 44,927. This is a decrease of 1.0% over the month from the previous level of 45,377.
This is the fourth consecutive month of decline. With EL claims as well, we seem to have moved from a position of relative stability to one of further decline.
The rate of decline has increased with EL claims as well. It was 1.9% between April 2017 and 12 months later, whereas it has risen to 2.9% over the last 12 months.
EL disease claims
On a 12 month cumulative basis, the number of EL disease claims now stands at 5,323 which is a reduction of 2.6% over the month from the previous level of 5,466. This remains a constant pattern of decreasing numbers for over three years.
The rate of decline has increased. It was 12.6% between April 2017 and April 2018 whereas it rose to 36.7% over the last 12 months.
Retention rates rose over the month in all four portals as the graph above demonstrates.
Longer term trends measured over the previous 12 months are also generally positive. RTA now stands at 54%, EL at 30%, PL at 22% and EL disease at 11%.
RTA claims – stage 3 use and PSLA levels
In April there were 5,370 RTA claims in which a court pack was prepared, preliminary to use of stage 3. This is a decrease over the month of 11.7% from the previous level of 6,083.
As the bars on the graph above show, the number of court packs prepared per month continues to be especially volatile at present. The average monthly number of court packs prepared for RTA claims in calendar year 2019 to date is now 5,745. This represents a 5.1% reduction from the 2018 monthly average of 6,052.
The average general damages level in April fell 0.7% from £2,827 to £2,808. This is the fourth consecutive monthly fall. The current level is the lowest since March 2018.
The current level is now only 0.9% above the average in November 2017 when the 14th edition of the Judicial College Guidelines are expected to have started impacting, recommending as they did average PSLA increases of 4.8%. The 15th edition is expected this autumn.
There does not appear to be any evidence from this data of claimant operations concentrating efforts on quantum (the impression is of the opposite), rather instead, their priorities are probably elsewhere in relation to costs and disbursements in advance of the further reforms.
Casualty claims – stage 3 use and PSLA levels
In the case of PL there were 65 court packs prepared in April, a reduction of 20.7% from the 82 seen in March.
The PL monthly average for the calendar year 2019 to date is now 74, a 10.4% increase on the 67 in 2018.
With EL there were 64 court packs prepared in April, a reduction of 9.4% from the 70 in March.
The EL monthly average for the calendar year to date is now 76, a 3.8% fall from the 79 averaged last year.
In the case of EL disease there were 2 court packs in April, doubling from the 1 seen in the previous month.
The 2019 monthly average to date for EL disease is now 1 court pack, half of the average of 2 per month seen last year.
In the case of PL, the average for April was £4,252, a 2.4% reduction from the £4,356 seen the previous month. No increase over November 2017 at the time of the last Judicial College Guidelines is apparent.
With EL the level increased over the month by 0.5% from £4,505 to £4,527. The current level is now 3.4% above November 2017.
With EL disease, the average level rose 11.9% from £3,890 to £4,352. The current level, albeit on small sample sizes, is 11.6% above where it stood in November 2017.
Comparative use of stages 2 and 3
The graph above (disregarding the artificial EL peak affected by untypical data) shows in the case of RTA a continuing reduction of the number of claims proceeding to stage 3 when seen as a ratio of claims concluding as to quantum at stage 2. We ceased seeing an increase above 30% some months back and including April's data, there appears now to be a downward trend.
The position remains more volatile for PL and EL, both of which show an increase in the month, but remain either side of 10%.
The reduction in usage of stage 3 in RTA claims may be consistent with the trend noted earlier of continuing reduction of PSLA levels, consistent with claimant operations moving the focus away from quantum of damages towards costs and disbursements.
For more information please contact Simon Denyer, Strategic Legal Development Consultant Simon.Denyer@dwf.law
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.