Analysis of April portal data and early impact of Covid-19 on claims
The April Claims Portal data confirms the expected reduction in RTA and EL/PL new claims post Covid lockdown. What else can be gleaned from the information that has been released for April?
In our update last month we looked at the early impact of the lockdown on claims numbers. Despite March only being impacted for the latter part of the month it held the dubious distinction of the lowest number of CNF submissions per working day on record at 2,205.
April has seen that reduce to a new low of 1,190, a 56.5% reduction compared to the same month in 2019, and EL and PL claims have been similarly affected with 45% and 40% reductions year on year. We take our usual look at the Portal data in more detail below.
There is no doubt that numbers of vehicles on the road have taken a nosedive based on the government data, and Insurers have also reported anywhere between 50% and 80% declines in claims notifications in April 2020, depending upon their book of business.
The government uses Apple mobility data in its daily press conference, and an analysis of that suggests that driving reduced from 100% in early March to between 25 and 35% in late March/April.
However, that has gradually crept back up and as of 15 May was at 63% suggesting that after Boris Johnson's speech on 10th May loosening some of the restrictions, people are slowly getting back in their cars. How quickly that might translate to increased numbers of accidents and claims we shall have to wait and see.
Elsewhere, case law has to some degree been led by Covid-19 and the practical response of the Judiciary/Court Service to enable remote hearings to take place. As expected, work on the Whiplash Reforms has largely ground to a halt with other work taking priority. The MIB team did confirm that TPAs will be able to register direct with the Official Injury Service, once the new process is ready, with registration expected to open for TPAs in the summer.
Covid in practice
The ABI has recently extended the ABI/ACSO agreement to 5th June and the agreement regarding standstills on limitation to 17th June on the basis that generally they are working well. We thought it useful against that background to try and draw out some of the current behaviours are translating to practice.
Firstly, there are some differences in the profile of Commercial v Personal lines claims after the lockdown as might be expected, as significantly more commercial vehicles remain on the road. Occupancy is also down as people generally conform to the social distancing guidance.
An increase in the severity of accidents is also being reported in new claims coming through – there are more pedestrians/joggers out than normal and more cyclists including those who are less experienced on the roads. That, combined with some worsening driving behaviours already – people speeding due to less congestion, more traffic signal collisions (missing red lights), reduced familiarity with the controls, vehicles not being in as good condition etc. has meant that the percentage drop in serious injuries is not in line with the reduction in BI frequency overall.
Data has shown a decrease in CNFs proportionately from LEI/ABS route to market and corresponding increase (in percentage terms) from AMC and Farmed routes. There could be a number of reasons for that, including the most obvious that real accidents have reduced and fraudulent ones have not.
As we have said there are a higher percentage of accidents in commercial than private motor currently, and if we look at fleets they are more likely to be referred to accident management companies.
We have also seen and heard reports of older claims being presented and re-presented as claimant solicitors trawl through previously repudiated claims in an effort to replace some of the lost revenue from new claims. So in short, there is a two pronged pressure on the "others" through farmed and commercial vehicles which is maintaining a level of buoyancy that is not there in LEI/ABS.
It seems too early to tell if there are any particular issues relating to remote examinations and physiotherapy. We expect to see an increase in layering, particularly where the claimant has one remote initial medical report which then recommends additional remote treatment and further reports. One of the biggest problems to face insurers in recent times, layering and claims inflation, including dubious rehab can only get worse as those involved attempt to bolster profits.
From a bent metal perspective there is lower frequency but those accidents which do happen are likely to be of a higher severity given that there are proportionately more commercial vehicles on the road and also that the accidents will be of a higher speed. This may mean that more private vehicles are written off rather than repaired.
As it is currently difficult to purchase a replacement vehicle this is leading to arguments from Credit Hire Organisations (CHOs) that claimants should remain in hire vehicles for longer periods. There is also pressure from bodyshops to increase repair rates, and extra valeting, leading to increased severity on damage claims.
Similarly, with CHOs, on the one hand claimants have a reduced need for replacement vehicles due to travel restrictions and could manage with lesser vehicles instead of like for like, but where ones are hired out, the CHOs are trying to maximise the length of hire.
Long term trends
The future very much depends on how the continued lifting of lockdown progresses. We think it is most likely there will be a gradual lifting of the current lockdown and so vehicles on the road will increase gradually over time rather than there being a short sharp shock. But it also seems likely when people do return to work they will avoid public transport which will put more people on the road boosting numbers slightly.
On the flip side, we will still presumably have larger events such as football matches behind closed doors and pubs and restaurants closed or reduced for most of the year. Equally – will there be a sustained reduction in frequency due to online meetings / shopping etc. becoming the norm? One thing that seems certain, is that people won't go back to doing what they did in the way they did it before.
Both remote medical examinations and remote physio will increase in frequency as currently the travel to an expert and time spent face to face can be a barrier to some claimants in presenting claims for injury and rehab. Any move to try and introduce remote examinations/treatment as the new norm will have to be carefully monitored.
We are of course likely to be coming out of lockdown into a recession so a revisit of past data to gauge the impact of fewer vehicles on the road might be useful, although it's a different kind of recession to those in the past. One strong possibility is that people might let their car insurance lapse during this period when they are not being used. Data reveals a 38% rise in online ‘SORN’ searches from 1 to 28 March 2020. We can envisage a rise in uninsured motoring post lockdown. A recession generally coincides with an increase in uninsured driving in any event.
Soft/opportunistic fraud is already on the rise with people running out of money, being more prepared to "have a go" and justifying it to themselves as not really fraud…
Finally, as we know the whiplash reforms have been put off to April 2021 which is good from a planning perspective, but any expected benefit from reduced costs (the main benefit even ignoring issues around multiple injuries would be an immediate cost saving of £500 per claim on claimant solicitors' costs) will not be realised this year.
Court & procedural developments and case law
Whilst the back end of March was a confusing time for practitioners as different Court Circuits handled the crisis in completely different ways, some adjourning huge swathes of cases, others attempting to run as many as possible, April found a greater degree of consistency or at least communication from the courts.
HMCTS continues to publish its operational summary on courts and tribunals, now weekly. The summary also provides new information in relation to updated civil court listing priorities and joining video hearings using Cloud Video Platform and Skype for Business.
The MOJ have not hung about, and at the beginning of May the Civil Justice Council launched a snap consultation of practitioners on what is working well and what isn't, what hearings could proceed and other practicalities. On the civil side, it was felt generally speaking that CMC/CCMCs and application hearings along with simple quantum disputes such as disposals and stage 3 hearings worked well remotely. Full scale trials, especially those with a sniff of fraud and involving multi parties, did not work so well and most are being adjourned.
With an admirable eye on the medium term, the DCJs for Greater Manchester and Cheshire/ Merseyside are actively exploring the possibility of undertaking “hybrid trials” (judge and legal representatives in court with witnesses via video link) and full “in person” trials. They expect to be in a position to announce their plans soon.
An in-house DWF example of dealing with cases under new Covid procedures is provided by our own recently successfully defended claim, farmed by cold calling in a hearing carried out by Skype. Whilst this case proceeded, many cases with a fraud angle are being adjourned until such time they may take place in person.
Outside the claims arena, as an example of how far the courts and the legal profession have adapted to new social distancing hearing arrangements, the High Court in A Local Authority v A Mother (Fam Ct), decided to hear lay evidence remotely, in determining the important issues in a local authority's application for a care order in respect of a four-year-old child, rather than adjourn the case having already heard the medical evidence.
As we commented last month, one positive effect of the crisis may have been to bring forward LJ Briggs' vision of the online court by a significant period. Writing in the Financial Times on 7 May, Richard Susskind, technology adviser to the Lord Chief Justice of England and Wales suggested that most remote hearings have gone well, and he argues that the challenge now is to develop a system that will deliver court services in ways that were previously impossible or even unimaginable. The point is not to computerise current practices. The great power of technology lies in transformation, not in automation, Susskind suggests.
Indeed, as if to affirm Susskind's view, the Lord Chief Justice, speaking in a virtual roundtable appearance before the House of Lords constitution committee on 13th May, made it clear that, since the lockdown began there had been "an astonishing amount of innovation". A transcript of the Lord Chief Justice's evidence can be viewed here, and he commented that it was "eccentric" that the County Courts still used paper. Investment must continue in the courts and resources. He recognised that we have had to move forward due to the Covid-19 crisis, and that there will inevitably be an increased demand for online hearings in the future. Ultimately, he acknowledged there will be no going back to how things were in February 2020 in the courts...
Another unexpected impact of the Covid-19 crisis has been in relation to e-scooters where the government has announced that trials will be brought forward from next year to next month to “help encourage people off public transport and onto greener alternatives.”
But significant questions remain over the practicalities of the use of e-scooters and the safety aspect. Where should they be ridden? Safety concerns will be paramount for both users and those who may come into contact with them hence questions around speed limits, compulsory wearing of helmets, use of lights, brakes and so on. Insurance is likely to be compulsory and if so how can that be properly monitored/enforced?
The Department for Transport's consultation on the Future of Transport Regulatory Review has been extended to 3rd July 2020, and on 18th May they issued a separate urgent consultation on the rules during the trials. They have confirmed that during the trials "e-scooters will continue to be classed as motor vehicles, meaning requirements to have insurance and the correct type of driving licence will continue to apply. In the future following trials, they may look to amend the law to treat e-scooters more like EAPCs (electrically assisted pedal cycles)
For the purpose of the trials, helmets will be recommended but not compulsory, e-scooters will be allowed to use the same road space as cycles and EAPCs, and speeds will be limited to 12.5mph. There are two requirements in primary legislation that are not being amended for the trials. First, e-scooters in trials are required to be covered by a motor vehicle insurance policy, by their provider. Secondly, e-scooter users are required to have a driving licence in some form. It is anticipated that is likely to change over time.
It certainly heralds the government's desire to make this happen quickly.
Portal data for April 2020
New RTA claims
New CNFs fell to the lowest level in their history, as envisaged in last month's update, with just 23,796 new claims submitted, down 52% on the past month and 56.5% on the same month in 2019.
The number of cases per business day fell to 1,190 per day, again the lowest ever:
The reduction has been so severe that it is already showing on the cumulative rolling 12 months:
New Casualty Claims
In EL, there was also a significant drop off in claims but not quite as high as RTA:
There were 2,050 new claims submitted in April 2020, a reduction of 40.3% on the prior month and 45.7% on the same month in the prior year.
Similarly, new PL claims submitted a fall by 38.7% on the prior month and 40.3% down on the previous year amounting to 2,629 new claims in the month.
The only increase this month has been seen in EL Disease Claims, which rose slightly by 3% against the previous month but EL Disease claims are often presented months after the initial screening and inception of the claim due to time taken to complete ELTO and other enquiries.
PSLA figures and Stage 3 Usage
RTA PSLA figures actually increased slightly to £2,849 the third month in a row that PSLA has increased although the figures are very slight. If there has been increased appetite to settle claims in the Covid-19 environment, the data suggests that has worked out in favour of claimants.
RTA Court packs dropped in April from 5,469 to 4,424 which is the lowest figure for 5 years, not unexpected in the current environment although with the lag from CNF to the end of stage 2, that won't as yet reflect the new claims reduction, and we should see further significant reductions in the months ahead.
EL accident PSLA reduced by 0.9% to £4,479 and PL also dropped by 0.7% to £4,405
The percentage of court packs relative to stage 2 settlements overall in RTA continues to fall from its peak in 2018, now close to 25%:
Retention Rates and other items
Retention rates have temporarily reduced across the board (save for EL disease) due to the way they are calculated with the low number of CNFs compared to claims leaving the process at stage 1, 2 or otherwise:
The breakdown of concluded claims for RTA shows an increase in the percentage of claims settled at stage 2:
Whilst the pattern is less clear for EL and PL claims:
And so to next month…
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.