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Latest trends on claims volumes and in the market

The latest claims statistics issued this afternoon by the Portal Company present another good opportunity not only to see where we are now standing on volumes of new claims notifications, but also once again to use current trends to look ahead into 2014. The latest stats are for the month of October and are the last we will see this year. November's figures will be released in early January.

RTA claims

The number of new CNFs rose 5,000 from the previous month's figure, and now stand at 69,000. The significance of this number is that we have quite quickly moved back to the average monthly number of new RTA claims which we were at before the stats started to be skewed by the implementation of the current reforms in the later part of last year. We had expected the number of new RTA claims to be back up to 70,000 by the end of this year, and it now looks as though November's number will breach that level when it is released next year.

As £10-25k RTA claims for new post 30 July accidents are within the portal processes it remains likely in our view that the number of CNFs entering the portal will increase to a new level higher than the pre Jackson average. This though is not a like-for-like comparison as the pre-Jackson portal number excluded this higher bracket of claims which used to proceed outside the portal, for which no stats are available.

But if we are looking for trends from the stats we do have, there are no signs here of a decreasing number of new notifications of motor claims in the year ahead. The market developments mentioned below would support the likelihood of the number of new claims being similar to previous levels, but of course 2014 should see a more stable claims landscape as we move into a period of consolidation post the reforms.

EL, PL and EL disease claims

A third month's stats are available, but the data is immature and it is difficult to reach any long term conclusions just yet. Use of the new portal processes is as you would expect picking up. All three categories of claim have seen the number of new CNFs rise by between 80-97%. There were 1795 new EL accident claims (1099 the previous month), 3241 new PL claims (up from 1843) and 578 new EL disease claims (up from 243).

Retention rates of these new types of claim within the portal are likely to seen as important by this new market going forward. This month, 61% of new EL accident claims were retained in the portal as against an average of 62% previously. For PL 57% of this month's claims were retained, lower than the previous average of 63%. For EL disease only 42% were retained this month, lower than the previous average of 67%. It's too early to say there is anything significant over these falls in retention rates, there will be various reasons for claims dropping out, still mainly based around users of the new processes becoming familiar with them and this is likely to last for at least the first half of next year.

A few more settlements to report within the horizontally extended portal, though perhaps unsurprisingly no disease settlements yet. 19 EL accident claims settled and the average PSLA figure has fallen slightly to £1745, while 12 PL claims settled where the corresponding average was £1287, similar to the previous average. Both of these quantum figures will inevitably increase as the larger claims move through the process.

Market developments – businesses getting bigger

Nothing stands still in the move from traditional claimant firms towards larger, leaner models. The biggest news was the confirmation from Slater and Gordon that they intend to purchase the personal injury and other consumer operations of Pannone and Partners. S&G say that when the deal completes in February they will have over 5% of the claimant injury market in the UK. Their revenues will rise to £89m and they will have 1200 UK staff.

Others are not standing still either. Quindell have raised a war chest of £200m through a share placement to fund their proposed growth next year. While Minster Law have opened in London, some distance from their Yorkshire roots, and want to become known for multi-track and catastrophic claims as well as being handlers of large volumes at the lower end of the market.

Other market developments – a firm pulling out

The decision by Walker Morris (previously W M Claims) to withdraw from the injury market gives a good insight of what other similar firms will be considering. They spoke of "uncertainty" in the claimant injury market, and saw that the work needed "a more process, volume driven approach" which they clearly saw was not for them. They referred to "significant structural changes in the market", and also interestingly to "those changes which (they) believe will happen in the future". No names were given to those potential future changes, but were they perhaps referring to their view that the small claims track limit is going to rise at some point by more than just inflation?

All of these developments will continue during 2014. Looking ahead, next year will be a time to adapt to the new post extended portal, post Jackson landscape. The new big players on the claimant side will be working hard to generate claims and to see that as the statistics suggest there will be no falling off of claims volumes in the medium term.

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.

Simon Denyer

Partner

I am the Strategic Legal Development Partner within the Insurance team.

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