Portal data, claims trends and claimant behaviours
18 July 2014
This week’s release of the June monthly stats from the Portal Company allows us again to look at the important issue of claims numbers and volumes, as well as the latest in other portal behaviours, both in RTA and casualty claims, alongside areas of focus for certain claimant injury operators.
In June there were 67,300 new claims submitted, a rise of 900 from last month. In the previous month of May the figure had been 66,400, which we saw had increased towards the pre-reform monthly average of 67,500, but the June figure which we now have is even closer to that figure. OK the new figure now includes the £10-25k claims bracket and so is not a complete like-for-like comparison, but this is now the third consecutive monthly increase, and if anything surely confirms that RTA claims numbers are edging back towards pre-reform levels even though some may report that we may still be a little short of those levels currently. And all of that within a month of 20 working days as was also the case in April and May.
And if we add in the DfT data about vehicle miles travelled, as well as the number of accidents which is likely to continue to increase correspondingly, taking into account the time lag between the accident and the subsequent claim which on this graph we show as 3 months, there is a reason here to expect to see RTA new claims levels to nudge further upwards as we move through 2014.
Casualty accident volumes
We are now 11 months into the new EL and PL portals so there is partial but not full maturity around claims numbers of this type of claim. When looking for trends we therefore need to continue to look both at RTA volumes which are the best guide to the claimant personal injury market generally, as well as the early signs from the casualty portals themselves.
This month, there is a significant increase in the number of new EL accident and PL claims entering those portals. The EL accident number is up 8% to 4,003, and the PL is up 7% to 6,346. Both numbers are the highest ever monthly number of claims into those portals since they were established, and both seem to show new claims numbers increasing again after a stable period previously. The position with the EL disease portal is becoming so different that we are going to deal with it separately from the accident portals, please see below.
These are the new claims notification curves on EL accident and PL:
One of the reasons for the increase in the number of new casualty claims of these types is the fact that 11 months after the inception date for these portals (calculated by reference to an accident date of on or after 31 July 2013), we are moving towards the position where the majority of these claims will now be submitted via the portal so that we should expect these figures to increase. Another reason is that we have a situation where claimant casualty lawyers will be getting more familiar with the portal.
Looking ahead, a more interesting question is the extent to which this type of claim will be seen as more attractive to claimant lawyers moving forwards where of course pre 30 July 2013 claims will not be subject to fixed costs, and also the fact that where fixed costs do apply either inside or outside the portal, they are at higher rates than for RTA claims.
So how are we doing in retaining claims within the portal? This graph shows the position since the start of last year. The RTA retention figure has been around 50% for a few years now, with any real deviance from that being due to pressures caused by peaks of claims numbers as we saw in the spring of last year. Will the increasing interest on the part of some claimant lawyers in taking claims to stage 3 begin to have some effect in reducing the retention rate? We will see though its effect on the RTA retention rate figure may remain marginal.
With casualty claims, as retention rates are affected by claims dropping out at various stages of the process, and where claims have only started entering those portals 11 months ago, it’s too early to be dogmatic, but we can look at where we seem to be heading. The dotted lines for most of last year indicate that that data can really be ignored as sample size was so small. If we look at this year for EL accident and for PL, we can see some volatility, but looking beyond that, those lines on the graph seem to be heading towards a convergence at around 30%. This though would mean that 70% of EL accident and PL claims were dropping out.
Looking forward, we would expect some improvement in the retention rates for EL accident and for PL, so that EL accident will join PL on an upward curve. It would be worth having in mind an expectation that the EL accident and PL retention rates might end up settling in the 40-50% bracket. Not quite as high as RTA perhaps, but still a reasonable result. Again, EL disease is a different story, as we mention below.
Other RTA trends
Court packs for stage 3 rose again, up 5% to 2,408 for the month. The number of court packs has literally doubled in 12 months, a significant behavioural shift. The PSLA figure though was stable for the third straight month at £2,541.
Other EL accident and PL trends
For both these types of claim, PSLA figures seem to be stabilising at around the £3,000 mark. This would be 120% of the motor figure. The EL figure is now £2,919 and the PL one £3,020. But it’s still early days.
The number of PL cases moving into stage 3 has increased significantly this month: there were 22 court packs in June, which has doubled the number since that portal was established to 44. Total number of EL accident cases at stage 3 is 21. At least in the case of PL, we may be starting to see the same drivers in operation as we have been for RTA with an increasing keenness on the part of claimants (or their lawyers) to take claims through to that stage.
EL disease claims
If we needed more evidence about the difficulty of operating these claims within the portal then this is what we have from this month’s data. It seems clear that in analysing the portal data both now and in the future, we need to be aware of the key differences between this type of claim and other types of casualty cases.
Looking to the retention rate graph above, you can see that the EL disease retention rate has for the first time fallen as low as below 10%. In other words, over 90% of disease claims are dropping out of the portal. And that is on top of way that certain claims are already being excluded from the portal in the first place by behaviours such as the addition to the claim of a second defendant. There is some confirmation of this practice from the fact that the number of new disease claims entering the portal is static for the third consecutive month at 1,378, with no increase as we have seen for EL accident and for PL claims.
Not only is the EL disease portal as it currently stands going to be seen as suitable for concluding only a significant minority of disease claims, but also claimant lawyers are going to continue to look to avoid altogether it wherever they can.
Of the few disease claims that are able to successfully get through the portal process, there have now been 214 settlements, 17 have proceeded to stage 3, and the level of PSLA has fallen from a peak of £5,665 to £4,762.
Claimant lawyers looking for hourly rate cases
All of this has to be set against the move by certain claimant lawyers away from RTA claims and the reduced fixed fees which have been implemented, into the types of injury claims where higher rates are still payable, especially hourly rates which of course remains the favourite of claimant lawyers. Hourly rate work of course includes disease claims where they do not need to enter the portal in the first place or which can be dropped out of the portal, as well as claims which are not in the categories which enter the portal in the first place such as clinical negligence and travel claims. The explosion in the number of deafness claims is of course a case in point.
But it’s not necessarily straightforward for claimant operations to successfully move into new potentially complex claims types. Quindell are one who seem to see deafness claims as a particular area of focus but they are not alone. The robust but appropriate repudiations made by most insurers in response to to the current surge of deafness claims will constitute a particular challenge for those claimant lawyers who continue to chase the hourly rate in this type of work. Another solution for these practices will be the introduction of fixed fees for all types of claim worth less than £25k, though this is not at least immediately on the horizon.
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.