Published : Jul-2017
No. of Pages : 53
EXECUTIVE SUMMARY 2
1.1. Market summary 2
1.2. Key findings 2
1.3. Critical success factors 2
2. THE PERSONAL INJURY CLAIMS MARKET 9
2.1. Introduction 9
2.2. A post-LASPO landscape is emerging 9
2.2.1. Claims numbers have been falling following a surge in the build-up to LASPO 9
2.2.2. Claims settled have resurged in 2016-17 following a decline since LASPO 9
2.2.3. LASPO created a shift in personal injury claims that is still playing out 11
2.2.4. Return to growth for motor claims, while employers' liability and public liability claims fell 11
2.2.5. Holiday sickness claims are an emerging area of personal injury claims 13
2.2.6. Claims settled have risen due to a rise in employers' liability although claims recorded have fallen 15
2.3. LASPO has had a mixed impact on the market 15
2.3.1. The ban on referral fees is thought to have had little impact 15
2.3.2. Civil justice reforms have reduced costs 15
2.4. The Civil Liability Bill aims to reform personal injury claims 16
2.4.1. The benefits of LASPO did not fully materialize 16
2.4.2. Initial proposals aimed to increase the small claims track limit and remove general damages for minor soft tissue injuries 16
2.4.3. The MoJ has published its first response to the consultation of reforms 16
2.4.4. The Prison and Courts bill was scrapped due to the UK snap general election 17
2.4.5. The Queen's Speech following the election has introduced a Civil Liability Bill 17
2.4.6. There has been a two-tone reaction to the Civil Liability Bill 17
2.4.7. The Civil Liability Bill is estimated to save £35 on motor insurance premiums 18
2.4.8. The small claims limit will increase to £5,000 for RTA claims but £2,000 for all others 18
2.4.9. A tariff system is being introduced for RTA-related soft tissue injury claims 19
2.4.10. Claims will not be settled without a MedCo medical evidence report 20
2.4.11. Reforms are concentrated in the motor market 21
2.4.12. The Insurance Fraud Taskforce's final report was published in January 2016 22
2.5. The discount rate has increased the cost of personal injury claims 22
2.5.1. The discount rate has changed from 2.5% to -0.75% 22
2.5.2. Insurers' profits have been hit by the rate change 23
2.5.3. The Ogden rate change cost the insurance industry £3.5bn 23
2.5.4. Insurers highlight the hit to their profits in their 2016 end-of-year results 23
2.5.1. The discount rate change is also detrimental to NHS costs 24
2.5.2. The MoJ is consulting on how the Ogden discount rate should be set going forward 24
2.6. Insurance premium tax has risen to 12% 25
2.6.1. Rises in IPT have additionally contributed to rising insurance rates for customers 25
2.6.2. The UK now has the sixth highest IPT in Europe 25
2.7. Claims management companies are still under surveillance 26
2.7.1. The Financial Guidance and Claims Bill will strengthen regulation of CMCs 26
2.7.2. There was a sharp decline in the number of CMCs following LASPO 26
2.7.3. CMCs will continue to consolidate and diversify their profits 27
2.7.4. The CMR continues to audit CMCs 28
2.7.5. Nuisance calls remain a priority for the CMR, which is evidenced by issued fines 29
2.7.6. The GDPR will impact the capability for cold calling 30
2.7.7. Marketing has been key to driving claims 31
2.8. Personal injury solicitors must prepare for tighter costs and a shifting landscape 31
2.8.1. Consolidation and contraction will result from the need for scale and efficiency 31
2.8.2. Slater & Gordon and Parabis provide insight into the issues of cost reduction 31
2.8.3. Restructuring is anticipated 32
2.8.4. The SRA is likely to be given more power 32
2.8.5. Fixed recoverable costs are under review and are expected to rise 32
3. PERSONAL INJURY CLAIMS: MOTOR INSURANCE 34
3.1. Motor claims have risen as the market has adjusted to LASPO 34
3.1.1. Motor claims have risen for the past two years 34
3.1.2. Claims settled remain above pre-LASPO levels 34
3.1.3. Motor personal injury claims remain high, while RTA claims are in decline 36
3.1.4. Rising claims costs have caused insurance premiums to increase 37
3.2. The UK's compensation culture is an ongoing issue 38
3.2.1. Whiplash claims account for up to 80% of motor personal injury claims numbers 38
3.2.2. Fraud remains a significant issue 39
3.3. Proposed reforms will impact motor insurance profitability 39
3.3.1. Tariffs and the small claims track limit increase will have a significant impact 39
3.3.2. The increase in the small claims track could affect 70-r claims 40
3.3.3. Legal costs could be reduced by up to 50% 40
3.3.4. The introduction of tariffs could reduce whiplash claims costs by £1bn 41
3.3.5. Vehicle technology will drive falls in claims numbers in the long term 41
4. PERSONAL INJURY CLAIMS: EMPLOYERS' LIABILITY 42
4.1. Employers' liability claims have continued to fall 42
4.1.1. Disease claims have been falling since the introduction of LASPO 42
4.1.2. Activity to drive NIHL claims has fallen, causing disease claims to decline 43
4.1.3. Asbestos and mesothelioma claims remain stable 43
4.1.4. Claims settled are still rising sharply 44
4.1.5. Injuries to employees are in decline 44
4.2. The Claims Portal is having limited success for employers' liability 46
4.2.1. Only 20% of claims are estimated to meet portal criteria 46
4.2.2. Employers' liability claims, particularly disease, are too complicated to be settled inside the portal 46
4.3. Costs for the Diffuse Mesothelioma Payment Scheme have risen due to claims inflation 46
4.3.1. Total costs to the scheme have risen to £40.4m in 2016-17 from £31m in 2015-16 46
4.3.2. The value of awards is increasing, but applications appear to be flattening 47
5. APPENDIX 48
5.1. Abbreviations and acronyms 48
5.2. Bibliography 49
5.3. Further reading 51
List of Tables
Table 1: Personal injury claims recorded and settled, 2010-17 13
Table 2: New tariffs will be introduced instead of removing general damages for RTA soft tissue injury claims 20
Table 3: CMR enforcement of the personal injury sector through audits, investigations, warnings, and visits, 2013-16 29
Table 4: Employer-reported fatal and non-fatal injuries to employees, 2010-16 45
List of Figures
Figure 1: Claims settled have increased by 5.2% year-on-year despite the number of claims recorded continuing to fall 10
Figure 2: Motor claims maintain the lion's share of total cases 12
Figure 3: ABTA has launched a "Stop Sickness Scams" campaign to discourage fraudulent holiday sickness claims 14
Figure 4: The number of claims management companies is continuing to fall, albeit at a slower rate 27
Figure 5: Motor claims recorded and settled are increasing and are above pre-LASPO levels 35
Figure 6: The total cost of motor personal injury claims was £6.6bn in 2015 36
Figure 7: The number of RTAs is in long-term decline 37
Figure 8: Average claims costs and motor premiums are increasing 38
Figure 9: The introduction of the Civil Liability Bill will deliver significant cost savings for motor personal liability claims 40
Figure 10: Accident claims dominate the employers' liability market 42
Figure 11: Total claims costs for the employers' liability market are falling alongside claims numbers 43
Figure 12: Injuries to employees are in long-term decline 45
