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Cutting through a confusing picture on the latest portal data

17 October 2014

September’s monthly data from the Portal Company released yesterday evening needs more interpretation than usual when we are looking for the latest signs on future claims volumes and settlement costs.

New claims statistics

As usual, we must go the RTA portal for the most mature data on the broader claims picture where that portal is now in its fifth year, unlike the casualty portals which are still growing as we move away from 30 July last year when they first came on stream. The number of new CNFs to the RTA portal last month was 75,000. This is the highest level of new claims into that portal since the peak between October 2012 and April 2013, immediately prior to the introduction of LASPO and the reductions in the level of stage 1 and 2 portal costs. But this headline though is not the end of the story and we need to analyse further.

This is how the data now looks with the new CNFs shown as bars:

SU 17 October

There are in fact two factors which need to be taken into account in relation to the latest figure which both will operate to dampen fears about this being a prelude to another surge.

The effect of the whiplash reforms

Firstly, we were expecting that there would be an increased volume of new CNFs last month, as it was at 1st October that phase 1 of the new processes around independence of medical experts was introduced. Certain claimant firms wanted to submit CNFs before the end of September because they were operating practices which risked coming unstuck regarding the need for the medical evidence having to come from an expert who had not treated the claimant and was not proposing to do so, or because the claimant was intending to use more than one expert, or because the claimant did not want for whatever reason the expert’s fees to be capped, or even perhaps because he or she did not want the defendant to have the chance of putting its version of the accident before the expert.

How significant was this factor on last month’s stats? We can’t say for sure of course, but our feeling is that while certain law firms would have wanted to bring forward into September the submission of claims leading to an increase its number of CNFs because of the desire to keep existing practices going a bit longer, it’s unlikely to have had as great an effect as when, for instance, stage 1 and 2 costs of the solicitors themselves were being reduced.

The IME Law effect

The second effect this month is one we have seen once before in the figures, in those for March 2014 in fact. You may recall that in March, the Portal Co noted an effect on its data in terms of the number both of new CNFs into the portal system and also of existing claims exiting the process. That month, the establishment of the ABS - Cogent Law was announced, which had the effect of existing claims which were from that date onwards to be handled by the ABS, being exited from the process as far as the identity of the former handler was concerned, and then being resubmitted as new claims by Cogent Law. At that time in March, we estimated that up to 3,000 of the new CNFs on the statistics were attributable to this effect.

In September, the formation of IME Law was announced. Certain cases being handled by Irwin Mitchell were transferred to that new ABS. Again, existing cases were exited from the process and resubmitted by IME Law. As in March, there is no data available to measure that effect. Our guess, and it can be no more than that, would be that between 1,000 and 3,000 of the 75,000 new RTA CNFs in September are attributable to this effect.

The dearth of data to assist

The Portal Company do not publish statistics showing the size of an effect such as this, so we do not know the true underlying position. They will look at obvious spikes and will investigate them, as they have done here, which has led to them annotating the stats produced this month, but they do not go further and try to calculate the size of the problem.

Looking back, it is clear to us that it is not only in March and September, with Cogent and with IME, that this effect will have been felt. When other ABSs have been established the same practice of exiting and resubmitting has often been followed. So we should recognise that there is some vulnerability by a couple of thousand of the new RTA claims data for certain months at least over the last year or so. And it is possible that a limited effect will have been felt on the casualty data at the same time, though the Portal Company have not said so either in March or now.

A conclusion?

So where does this leave the figure of 75,000 for September? Taking off the IME effect the number of new CNFs can already be reduced by a couple of thousand, we judge. And taking off the pre-1st October reform factor might reduce it by another few thousand. Is the adjusted figure in fact below 70,000? May be it is.

DfT data

The latest DfT datais shown as lines on the graph above superimposed over the portal data, with the DfT data brought forward 3 months in time to reflect the likely time lag between accident and CNF. The latest road casualty data is for Q1 2014, and at that stage it was showing a 1% rise over Q1 2013, but a fall from Q4 2013. At the same time, traffic levels were up 3%, so the lower increase in the road casualty data was attributable to the casualty rate per vehicle falling by 2%.

The most recent DfT data available on both criteria being looked at here, that is vehicle miles (Q2 2014) and road casualties (Q1 2014) are showing a downward curve for the first time after a number of quarters showing an upward trend. Assuming this follows through to the portal then there are pointers here against a continuing upward trend in the number of new CNFs in the immediate future.

New casualty claims statistics

Last month, there were 4,726 new EL claims, the highest number yet, but in fact only a modest increase of 46 over July. There were 7,472 new PL claims, again the highest yet, but only 180 more than July. Are we near to seeing a peak of those claims, just over a year into those portals? Perhaps we are as the increasing new claims numbers are now tailing off. They may remain at around these levels going forward.

EL disease is different as usual. There were 1,658 new claims last month, a fall of 76 since July. It is too early to know where the disease peak will end up, because of the greater opportunity to exclude a disease claim from the portal at the outset due to the eligibility criteria.

Retention rates

The IME factor will have an effect again as the number of claims exiting the process for that reason will be included in the number of cases leaving the process, so will depress the RTA retention rate, which has marginally reduced from the usual 50% level this month. The EL and PL portals are both showing a slightly increased retention rate this month, while the rate for EL disease continues to fluctuate quite widely. The variations in that portal are due in part to the smaller volumes, but it’s clear that they will remain the lowest of all the portals as users struggle to find the current portal processes satisfactory for that type of claim.

The latest graph shows this picture:

SU 17 October 2

Court packs in RTA

We have identified before the increased tendency to take claims to stage 3 where of course portal costs were not reduced last year, and indeed to the remarkable increase in the number of RTA cases going to stage 3 in July. That effect continues, but it may be levelling off.

The number of court packs in RTA cases in September was 3,069. This was the highest number ever, and double the number 12 months ago. But it was only 25 higher than July so the rate of increase is much slower than before.

PSLA figures in all claims types

In RTA, the average offer was £2,566, and the data shows a very modest increase over 6 months. The figure is now the same as in July – no increase. The stabilisation of that figure will be welcomed.

In the casualty portals, the EL figure is up to £3,221. Presumably larger claims are coming through as that portal is now over 12 months old and this may be an explanation for that. In PL the average is down to £3,107, and there are signs of it starting to stabilise at around that level. It would not be surprising if it were ultimately less than EL but higher than RTA.

EL disease is different again. The average is now £4,556, the second fall in a row, and we are now £1,000 below the peak in March. The figure is more volatile due to the smaller number of claims both entering that portal, and being able to stay in it through to settlement.

Contact

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

By Simon Denyer

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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