Call for General Election threatens delay to government's ongoing reform agenda, while Claims Portal data hints at initial moves away from RTA towards casualty claims ahead of incoming reforms
Today's surprise announcement from the Prime Minister Theresa May of her plan to hold a General Election on 8 June has caused astonishment both in Westminster and across the country as a whole. Insurers will be understandably concerned to know the impact of the announcement on current issues including the discount rate and the reform proposals regarding whiplash and the small claims track process.
At the same time, Claims Portal have released their data for March 2017 which helps us make both an assessment of current claims trends at the end of the financial year, as well as what may be early signs of a movement by claimant operations away from RTA claims and towards casualty claims which are likely to be less affected by the incoming reforms, assuming those reforms still proceed.
With the vote in the Commons not taking place till tomorrow, it is early to know for sure what impact the calling of a General Election will have. Today's announcement by the Prime Minister has caught the MoJ and no doubt other government departments by surprise, and they will need to consider the position further after the vote.
In broad terms, we would see it as likely that on the assumption that a new Conservative government is elected under Mrs May, that the planned way forwards on both the discount rate and on whiplash/small claims reform will continue, though implementation of changes will be delayed. There may well be a change of personnel and even of structures within the MoJ. The effect of holding another General Election and the consequences of doing so will inevitably be to delay progress on all issues of this type.
In terms of portal data, the trends on new RTA claims are still marginally downwards, but there are new signs of the longer term downward trends on PL and EL accident being reversed, perhaps as a result of the recognition that casualty claims will only be affected by the reforms to the extent of a limited rise in the small claims track limit to £2,000.
Theresa May's announcement
This was to the effect that she plans a General Election on 8 June. Under the terms of the Fixed-term Parliaments Act a two-thirds majority vote in the House of Commons is needed to approve the plan. The vote is to take place tomorrow. The required majority is likely to be achieved as Labour say they will support it.
The effect of the vote on the current parliamentary term is awaited. Dissolution of parliament will be expected at the start of May even perhaps as early as 2 May, at which point governmental processes will move into purdah with no further effective progress being possible.
Assuming the Conservatives win the General Election with Mrs May continuing as PM as expected, the government's current domestic policies including on civil justice issues would be expected to continue into a new parliament.
One matter that may be considered in a new government is what to do about the structures of the MoJ. Should a separate Lord Chancellor be appointed? Should the other duties of the Secretary of State for Justice be returned to another government department such as the Home Office?
In any event, a ministerial re-shuffle can be expected. This may well include consideration as to whether Liz Truss should remain in her current post. If there is to be a new incumbent, their views on the current issues will at least be of some relevance as to whether current reform pathways are the right ones.
Effect on current initiatives
The discount rate consultation is currently due to close on 11 May. An announcement on this may follow from the MoJ. But it may well continue its course towards the deadline day, though with purdah being expected to commence at around the same time if not shortly beforehand, decisions on the responses will have to be left till the formation of a new Cabinet. This will put back the process by some months.
The Prisons and Courts Bill is currently in committee in the Commons with the Public Bill Committee sitting this afternoon and currently due to conclude its work by 27 April. Government intentions as to the future of this Bill will no doubt follow after tomorrow's vote, though in view of the early stage of its parliamentary process, and the range of issues involved, it or at least Part 5 dealing with whiplash reform may not be thought suitable for being included in the "wash-up" process under which certain measures are allowed to pass into law following discussions between the parties with the usual parliamentary processes being shortened.
If not included in wash-up, then the Bill would, assuming a new government remains in favour of it, need to be re-introduced into the new parliament, perhaps back at first reading stage. The intention to introduce these reforms in October 2018 will, it seems to us, be likely to be delayed into 2019 in these circumstances.
Against this background, let us look at the latest Claims Portal data.
New RTA claims in March
There were 68,397 new RTA claims submitted to the portal in March. This was an increase of 10.9% from the February level. But this is the lowest level of new RTA claims submitted in the month of March since March 2011 when that portal was in its first year of existence.
The increase in March over February can be entirely explained by the increase in the number of working days between the 2 months: there were 20 in February but 23 in March as there was no Easter interruption in the March data this month. In other words we can see that the number of working days between the 2 months increased by 15%, which was more than the 10.9% uplift in the number of new claims.
When the number of working days per month is factored in then the data is as appears on the next graph, from which the adjusted fall as between February and March can be noted.
New RTA claims over preceding 12 months
Looking now at the longer term picture including volumes over the preceding 12 months, we again see a fall this month, though the extent of the fall is smaller than last month.
Over the last 12 months, RTA portal volumes now stand at 797,067, a decrease of 2,344 or 0.3% over the position last month when we saw a much larger fall, of 10,588 or 1.3%.
We have now seen 17 monthly decreases on this form of measurement over the last 19 months. The current cumulative level is now 9.5% below the peak seen in August 2015 at 880,044, and we continue to move closer to the post –LASPO low point seen in April 2014 of 771,709.
It seems likely that RTA volumes will continue on a downward trend assuming that the government's reforms affecting whiplash and lower value reforms move forwards, including though Part 5 of the Prisons and Courts Bill. But the announcement today of the planned General Election may be thought to have raised some doubts which may in turn delay any effects being felt.
We would expect new RTA volumes to reach the lower levels seen in April 2014 later this year.
New RTA claims annually
The availability of the March data enables us to conclude this annual assessment of the 12 month periods up to the end of March each year, and to further the provisional analysis done 2 months ago.
In the 12 months up to and including March 2017 there were 797,067 new RTA portal claims. This figure is higher than the totals for 2010/11 and 11/12, as well as for 13/14, but is lower than that seen in 12/13 as well as in the 2 most recent years of 15/16 and 16/17 (in each case by around 60,000 over the year or about 5,000 per month).
The average over the last 5 years now stands at 832,844, a level which last year's figure fell below by 4.3%. So while the portal statistics do show a limited fall when the data is looked at on this annual basis, volumes have been fairly consistent since the first year of the portal.
Over the years between 2011/12 and 16/17 the level of new claims notified to the portal have consistently remained within a range of 80,000: the parameters of that range being 786,000 and 866,000.
We await release by the DWP later this month of the CRU statistics showing the number of new claims notified to the CRU over the same period, that is the 12 months up until 31 March 2017.
Those CRU figures allow an assessment to be made of longer term trends as the CRU regime has of course been in place longer than the portal. The graph below which covers the period up until March 2016 can then be updated.
New casualty claims in March
The March data shows signs of increasing volumes of new claims into all 3 casualty portals. See all 3 coloured bars on the right hand side of the graph below. This may be an effect of the claimant market anticipating a greater effect on current processes in relation to RTA claims with casualty claims less affected.
New PL claims
In March there were 5,878 new claims notified, an increase over February of 19.2% (it will be recalled that the 3 extra working days are worth an additional 15%).
This is the highest monthly level of new PL claims over the last 16 months since November 2015. The level for March 2017 is higher than the same month in 2014 and 2016, though lower than in the corresponding month in 2015.
New EL claims
There were 4,578 new EL claims notified in March, an increase of 11.3% over the previous month.
This is the highest number of new EL claims in any month since September 2015, 18 months ago. As with PL, this level of new EL claims is higher than we saw in March 2014 and 2016, though lower than in 2015.
New EL disease claims
Even EL disease claims also saw an increase in March. The monthly figure for the month was 11.9% higher than in February, and is the highest level reached since June 2016, 9 months ago.
But this is still the lowest March for new EL disease claims since the casualty portals opened.
New casualty claims over preceding 12 months
The month-on-month data reviewed above feeds into the longer term analysis which also shows signs of change. What we now see are small rises in longer term trends as to volumes of new casualty claims.
The declining trend which had seen previously over 20 consecutive months has come to an end. This month the number of new PL claims over the preceding 12 months stands at 63,040, which is a rise of 0.2% over the position as it stood in February.
Over the last 12 months, the rate of decline has fallen from 11.6% to 9.4% over the month.
The previous pattern in relation to EL claims had been lees pronounced than with PL claims, as we had seen falls on this measurement in 12 out of the previous 14 months on this form of assessment. This month we have seen the same rate of increase as with PL claims, that is 0.2%.
Over the last 12 months, the rate of decline has fallen over the month from 6.6% to 5.5%.
EL disease claims
Unlike with PL and EL accident claims, the declining trend continues, the level over the preceding 12 months now stands at 10,359 which is the 15th consecutive monthly fall and is down 1.3% on the month.
Over the last 12 months the rate of decline has in fact also fallen over the month from 51.2% to 48.1%.
All 4 portals showed a declining retention rate last month. After the upturn in retention rates in the 3 casualty portals over the last 2 months we have a partial correction this month.
Longer term trends as shown on the graph above continue to demonstrate upward retention trends over the last 6 months or so in the casualty portals, with the RTA retention rate remaining stable at marginally above 50%.
Both of the graphs above now show "retained claims" as including those proceeding to stage 3 of the process.
RTA stage 3 usage and settlement levels
Increased use of stage 3 continues unabated. 6,677 RTA claims proceeded to stage 3 last month, the highest number ever. As expected, February's fall was indeed untypical.
The level last month reached £2,772. This is the second highest month ever and is a £12 increase over the preceding month.
We are now at a level which is 8.0% higher than the level seen in November 2015 shortly after publication of the 13th edition of the Judicial College Guidelines.
Casualty stage 3 usage and settlement levels
Increased use of stage 3 in EL and PL claims mirrors that in RTA claims. In PL it reached 78 claims, the second highest ever, while in EL the number reached 69, the highest ever. As the graph below however shows, both in the case of EL and PL, the percentage of those claims moving into stage 3, while increasing, remains lower than with RTA.
EL disease remains untypical, with only 3 matters reaching stage 3.
Again the position is similar to RTA in general.
With PL the level reached £4,187, the highest level ever, and now 9.9% over what we saw in November 2015 and the introduction of the 13th edition of the JSG.
In EL the comparative level was £4,024, only the 7th highest level, and 4.5% over that seen in November 2015.
As to EL disease, without placing any reliance on the data for significance, last month the level was £3,504, 12.3% below that seen in November 2015.
Measuring the increasing use of stage 3
The graph above show the increasing use of stage 3 for RTA, PL and EL claims. The percentage of concluded RTA claims needing to use stage 3 remains at between 25-30%. The PL figure is over 10% while the EL number is approaching that level. All 3 are on the increase.
We await release of the annual CRU data as well as news of government intentions regarding the Prisons and Courts Bill and the discount rate consultation in the days ahead.
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.