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Latest motor and casualty trends from yesterday's portal data

14 January 2015

The data released yesterday afternoon by the Portal Company shows a differing position as to new claims numbers between motor claims on the one hand, and casualty claims on the other. In both cases, adjustments are called for to take account of the Christmas/New Year break in order to carry out any proper analysis.

RTA portal new claims

In December the number of new claims to the RTA portal fell by 6,500 from 71,500 in November to a new figure of 65,000. This was the second successive monthly fall from a peak of almost 80,000 in October. What significance can we see in that as demonstrated here on this bar graph?

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The answer to that question must come with a recognition of the need to carry out a “seasonal adjustment”. We needed to do something like this with last month’s data, because the month in question – November, with only 20 working days, was the shortest working month that you could find when leaving to one side those months affected by public holidays.

The December data we are now looking at is in reality seriously affected by the same factor – a shorter working month. In November there were 20 working days. In December, if we take an average position and assume that claimant lawyers worked a full month up to and including Christmas Eve, but then did not return till the New Year (a position still often found amongst those firms), then there were 18 working days in December. If you do the maths on December’s new RTA claims number of 65,000 (65,000 x 20 ÷ 18 = 72,000) you get a similar number to November’s new claims figure of 71,500.

And to support the point, we can see that in the 4 previous Decembers that the RTA portal has been operating, we have seen an average fall between November and December of 14,000, whereas this year the fall was half that at 6,500. Perhaps the much smaller fall this December is worthy of note?

So as far as RTA new claims are concerned, there is some further support here for a view that volumes remain high, and even when we adjust for the fact that of course £10-25k claims are now included, that on average we remain at numbers of new claims which are at least equal to if not greater than pre-LASPO levels.

Casualty portals new claims

There is to some extent a difference this month between the trends on new claims in the casualty portals when compared with the RTA portal. Where there is similarity that comes from the fact that volumes are reduced for the second successive month in the EL accident and PL portals (for the third successive month in the EL disease portal), but the difference between these casualty portals and the RTA portal is the extent of the falls.

New EL accident numbers are down from 4,378 to 3,802 (13%), PL claims are down from 6,363 to 5,400 (15%) and EL disease from 1,542 to 1,365 (11%). These are greater falls than the allowance of around 10% which could be attributed to the shorter working month.

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As can be seen from this graph, new casualty claims volumes have returned to levels which they were at 6-9 months ago in the case of the EL accident and EL disease portals, and 8-11 months ago in the case of the PL portal.

If there is some surprise about this development, we must ask whether its effect is only temporary, and in any case do we know what factors it is due to? We need of course to know the cause in order to try to understand where the future trend will lie.

We have seen with the EL disease portal that there is an opportunity of avoiding that portal altogether if the claimant exhibits behaviours such as a greater willingness to add an additional defendant to the claim in order for it to fall into an excluded category of claim. But for EL and PL accident claims there is rather less opportunity to try to satisfy a definition of an excluded category. Yes, some claimants may unjustifiably try to satisfy the definition of a claim involving “harm, abuse or neglect of or by children or vulnerable adults” but those claims will not be significant in number.

So there must be other factors, but what they are is currently a matter of speculation where the signs are that the interest in this type of claim by claimant operations remains high. After all, the level of fixed costs for this type of claim is higher than for motor claims, whether inside the portal or outside. It will not be easy for claimant operations to farm claims of this type because of the lack of the same factors as exist in RTA and to some extent disease claims, so advertising for them will remain important instead. It’s unlikely to be due to a significantly reducing number of accidents of this type, as while we will need to await the CRU releasing their latest annual data of new notifications in Spring, the most recent claims numbers from that source showed stability in the new claims numbers.

So in conclusion we will need to await further months’ data in 2015 to see as to whether this is more than a temporary effect, and if it isn’t, further investigation would be called for as to the factors which are causing it.

Retention rates

We have previously shown this detail on a month by month basis. We have changed our approach this month to a cumulative basis as this month’s reduced claims volumes had skewed the graph on our usual approach. On our previous approach, the retention rate for PL was barely above zero, while that for EL disease was in fact negative.

Our new cumulative approach shows these retention rates:

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As to motor claims, the cumulative approach adds to the stability of the retention rate figure at 50%.

As to the casualty portals, there are clear decreasing retention rates in all 3 portals. These are caused mainly by the high numbers of claims exiting the process including at stage 1. Stage 1 exits in EL accident and PL claims are currently very high when compared to the intake of new claims. Over the last 3 months, in PL 64% of new claims exit at stage one, while in EL accident the corresponding figure is 49%. Exiting includes both a decision not to admit liability, as well as a liability timeout.

Somewhat different processes seem to be being followed on casualty claims when compared to motor claims which ought to maximise the defendant’s prospects of identifying potential defences or potential fraud in what is of course for the claimant a fixed costs arena both inside the portal as well as outside the portal (apart from in EL disease) even if the claims drops out.

Stage 3 and PSLA levels

In RTA claims the number of court packs in relation to claims moving to stage 3 fell very slightly for the second successive month by less than 0.5% to 3,211, due no doubt to the shorter month. The PSLA figure rose even more marginally by 0.1% to £2,590. We see the trend on motor cases moving to stage 3 as continuing to increase, and the relative stability in the data over the last 2 months being due solely to those shorter months. However, the rate of increase in PSLA has slowed to almost a stable level. The 13th edition of the Judicial College Guideline due out in the autumn of this year is likely to be the next relevant factor on this issue, and till then we expect to see this data remaining stable.

Looking therefore once again for reasons for the higher number of motor claims moving to stage 3, the new data seems to suggest that they do so not so much to obtain more damages, but the additional costs payable.

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In the case of the casualty portals, the most significant change is the substantial increase in the number of EL accident claims moving to stage 3. Last month there were 96 such cases, more than the 86 cases which had ever gone to stage 3 before in the months that that portal has been open, a total of 182. There have still been more PL cases going to stage 3 during the time that that portal has been open at 197, as well as 81 EL disease claims. Is the change seen for EL accident claims a sign that the greater willingness on the part of claimants and their advisers to take cases to stage 3 going to be seen as much in casualty as in motor claims? It would not be surprising if that proved to be the case.

The ratio of claims proceeding to stage 3 before concluding, when contrasted with the number of claims settling at stage 2 can be seen from this graph. As to the more mature data from the RTA portal, the change is significant. In January 2013 only 1 in 24 claims which settled did so at stage 3. But now, 1 in 5 claims which settle do so at stage 3. Any new claim to the RTA portal which is going to settle now has a 20% chance of needing to reach stage 3 before doing so. 

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The importance of strategies to respond to the increasing willingness to take claims to stage 3 is easily apparent.

Average PSLA figures continue to stabilise in the casualty portals at £3,325 for EL accident, £3,289 for PL and £4,345 for EL disease.

Contact

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

Previous portal data analysis

What are the conclusions from today's portal data? - 15 December 2014

Headline figure pointing upwards on latest data from the Portal Company - 17 November 2014

Cutting through a confusing picture on the latest portal data - 17 October 2014

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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