UK Personal Injury Litigation 2007

Table of Contents

• Overview
  • Catalyst
  • Summary
• Chapter 1: Executive Summary
  • The total number of personal injury claims rose by 5.4 per cent in 2006-7
    • The number of accident claims increased by 8.3 per cent in 2006-7
    • The number of disease claims fell in 2006-7, declining by 36.4 per cent
    • The breakdown of personal injury claims changed significantly in 2005-6
      • Employers' liability claims have fallen but motor-related claims have risen
  • The number and cost of motor personal injury claims rose in 2006
    • The number of motor personal injury cases reported to the CRU increased by 12.8 per cent in 2006/7
    • Personal injury claims grew as a proportion of total motor claims in 2005
    • The number of employers' liability claims fell to a five-year low in 2006/7
    • Workplace accidents and work-related ill-health dropped again in 2005/6
      • The number of workplace injuries dropped in 2005/6
    • The number of applications for employment tribunals increased significantly in 2005/6
      • Sex and race discrimination applications both rose by over 20 per cent
  • National Accident Helpline recorded the highest advertising spend for UK legal services products in 2006
    • Two of the largest claims management companies invested heavily in advertising
      • Several personal injury law firms invested heavily in advertising in order to reach the public directly
    • The advertising strategies of top personal injury intermediaries and firms varied in 2006
      • Most personal injury law firms focused on advertising via the radio
  • Brit was the UK' s largest legal expenses insurance provider in 2006
    • Brit controlled £71.6 million in legal expenses GWP in 2006
  • The DCA is proposing major changes to the personal injury market
    • DCA proposals could lead to a significant decline in the size of the ATE insurance market
    • The DCA is considering the termination of referral fees
    • The paper concluded that the small claims track limit would remain at £1,000
    • The consultation paper considered how the claims process for personal injury cases could be streamlined to make it more efficient and cost-effective
      • The DCA paper advocates the promotion of early admissions of liability and the removal of duplication of work
  • Claims Management Companies became regulated by the Ministry of Justice in 2007
    • The Claims Management Regulation Monitoring and Compliance Unit was set up to regulate the sector in April 2007
    • The new regulator will address a number of concerns over firm behavior
  • New NHS Injury Costs Recovery Scheme regulations came into effect in January 2007
    • The NHS expects to recover an additional £150 million a year through the new cost recovery scheme
  • The number of personal injury accident claims is forecast to rise between 2005/6 and 2011/12
    • The number of personal injury claims is forecast to rise by approximately 3 per cent per annum up to 2012
    • Datamonitor forecasts that total personal injury claims costs will surpass £8 billion by 2011/12
      • Increases in all lines, especially employers' liability, will continue to drive claims costs upwards
• Table of Contents
• Table of figures
• Table of tables
• Chapter 2: Market Context
  • Introduction
  • The total number of personal injury claims rose by 5.4 per cent in 2006-7
    • The number of accident claims increased by 8.3 per cent in 2006-7
    • The number of disease claims fell in 2006-7, declining by 36.4 per cent
    • The breakdown of personal injury claims changed significantly in 2005-6
      • Employers' liability claims have fallen but motor-related claims have risen
    • Accident claims account for the majority of claims by insurance category
  • The number and cost of motor personal injury claims rose in 2006
    • The number of motor personal injury cases reported to the CRU increased by 12.8 per cent in 2006/7
    • Bodily injury claims are the most expensive motor claims to settle
    • The average cost of a motor personal injury claim fell by 20 per cent in 2006
    • The number of bodily injury claims notified has risen by an average of 15.5 per cent each year since 2002
      • Personal injury claims costs rose to approximately 38.2 per cent of motor GWP in 2006
      • Personal injury claims grew as a proportion of total motor claims in 2005
  • The number of road traffic accidents and casualties declined in 2006
    • The number of road traffic accidents has fallen steadily since 1997 as a result of greater road safety
    • Despite the fact that the total number of licensed vehicles continues to rise, the number of road traffic accidents is falling
    • Road accident casualties fell in 2006
    • Injuries fell for many of the major categories of road user in 2005
    • The number of employers' liability claims fell to a five-year low in 2006/7
    • The cost of employers' liability claims declined by 9.4 per cent in 2005
    • The British Coal scheme has cost £3.4 billion so far, although the majority of payments are for minor amounts
      • The British Coal scheme is expected to cost £7.5 billion when all claims have been settled
      • The majority of compensation offers to claimants for respiratory disease are below £5,000
    • Workplace accidents and work-related ill-health dropped again in 2005/6
      • The number of workplace injuries dropped in 2005/6
      • The number of workplace injuries, as reportable under RIDDOR, excluding acts of violence, decreased by 4.3 per cent in 2005/6
      • Overall workplace injuries dropped in 2005/6 to an estimated 350,000
      • Workplace fatalities increased in 2005/6 mainly due to more fatalities among the public
      • Total work-related ill-health dropped in 2005
    • The number of applications for employment tribunals increased significantly in 2005/6
      • Sex and race discrimination applications both rose by over 20 per cent
    • Employers' liability claims are both costly and lengthy to settle
      • Employers' liability claims have a long latency period
    • Claims costs can accumulate to almost equal the premium income received
      • The average cost of an employers' liability claim increases with time
• Chapter 3: ATE and BTE insurance markets
  • Introduction
  • ATE insurance covers the claimant against legal costs and is sold via a variety of parties
    • ATE insurance covers the claimant in the event that they lose their case and are required to pay the costs of the other side
    • Accident intermediaries and solicitors sell ATE policies to claimants
    • Allianz, Brit, DAS and Royal & SunAlliance are the major providers of ATE insurance
    • ATE insurance policies are usually sold through intermediaries
    • The Claims Direct brand is being rebuilt by Russell Jones and Walker
  • National Accident Helpline recorded the highest advertising spend for UK legal services products in 2006
    • Advertising plays a major role in promoting services offered by accident intermediaries and personal injury lawyers
    • Two of the largest claims management companies invested heavily in advertising
      • Several personal injury law firms invested heavily in advertising in order to reach the public directly
    • The advertising strategies of top personal injury intermediaries and firms varied in 2006
      • Most personal injury law firms focused on advertising via the radio
      • Advertising strategies are affected by the level of expenditure
  • Profiles of accident intermediary and personal injury law firms
    • Injury Lawyers 4U
      • Injury Lawyers 4U was formed in 2002 as the failings of TAG and Claims Direct were becoming apparent
      • IL4U uses a panel of around 70 firms of solicitors
      • There is neither a designated insurer or funding partner
      • InjuryLawyers4U is a major television advertiser
    • National Accident Helpline
      • National Accident Helpline was established in 1993
      • There were around 100 member firms of solicitors on NAH' s panel in 2006-7
      • NAH recommends deferred payment ATE policies
      • The company generates its caseload largely via television advertising
    • Shoosmiths
    • Accident Line
      • The Accident Line brand was formed in the early 1990s by the Law Society
      • There are 250 member firms on AL' s panel
      • AL generates business via directory advertising and relationships with advice agencies
    • Claims Direct
      • Claims Direct operates a small panel of solicitors
      • Its caseload is generated via a mix of advertising media
      • Between 400-450 cases were accepted per month during 2006-7
    • Personal Injury Helpline
    • Accident Advice Helpline
      • Accident Advice Helpline was set up in 2000
      • Its funding partner pulled out of the market in 2004 and the company went into administration as a result
      • Its advertising budget was cut significantly in 2006
  • Brit was the UK' s largest legal expenses insurance provider in 2006
    • Brit controlled £71.6 million in legal expenses GWP in 2006
• Chapter 4: Regulation and Issues
  • Introduction
  • The DCA is proposing major changes to the personal injury market
    • DCA proposals could lead to a significant decline in the size of the ATE insurance market
    • The DCA is considering the termination of referral fees
    • The paper concluded that the small claims track limit would remain at £1,000
    • The consultation paper considered how the claims process for personal injury cases could be streamlined to make it more efficient and cost-effective
      • The DCA paper advocates the promotion of early admissions of liability and the removal of duplication of work
      • The DCA also wants to reduce the "scope for argument"
  • Claims Management Companies became regulated by the Ministry of Justice in 2007
    • The Claims Management Regulation Monitoring and Compliance Unit was set up to regulate the sector in April 2007
    • Most companies applying for authorisation were specialist claims management firms
    • The majority of companies applying for authorisation have relatively small turnover
    • Attempts were made to encourage self-regulation in the sector, however these were unsuccessful
    • The new regulator will address a number of concerns over firm behavior
  • The DCA' s second major paper reviewed the law on damages
    • The DCA is recommending that changes are made to claims for wrongful death and bereavement
    • The DCA has rejected calls for statutory provisions in psychiatric illness cases
    • The DCA is reconsidering the approach towards collateral damages
    • The DCA is seeking views on whether to stop deducting sick pay from loss of earning damages
    • The Government is recommending that damages for gratuitous care should no longer be held in trusts for the carer
    • The Law on Damages paper also discusses calculations for injury-related accommodation expenses
  • New NHS Injury Costs Recovery Scheme regulations came into effect in January 2007
    • The NHS expects to recover an additional £150 million a year through the new cost recovery scheme
  • The House of Lords is reviewing whether compensation should be paid for pleural plaques
    • No final decision has yet been made on whether insurers are liable to pay compensation for pleural plaques
  • There has been significant growth in the use of alternative dispute resolution schemes such as InterResolve' s Bodily Injury Claims Scheme
    • Independent providers like InterResolve are achieving cost savings by streamlining claims processing
    • Avoiding litigation can create more proportional third party costs
    • Mediators are capturing business through a growing number of channels
    • The sourcing of medical reports and the provision of treatment is also made more efficient
• Chapter 5: The Future Decoded
  • Introduction
  • The number of personal injury accident claims is forecast to rise between 2005/6 and 2011/12
    • The number of personal injury claims is forecast to rise by approximately 3 per cent per annum up to 2012
  • Datamonitor estimates that personal injury claims costs will increase in 2007/8
    • Claims costs are forecast to reach £7.5 billion in 2007/8
    • Datamonitor forecasts that total personal injury claims costs will surpass £8 billion by 2011/12
      • Increases in all lines, especially employers' liability, will continue to drive claims costs upwards
    • The reforms proposed by the DCA in 2007 could impact on claims costs
• APPENDIX
  • Supplementary information
    • Funding options for personal injury claims
    • The impact of the reforms to the Access to Justice Act 1999
      • The withdrawal of Legal Aid
      • Private funding
      • CFAs: the key to the courtroom door?
    • Legal expenses insurance
  • Definitions
  • Research methodology
    • BTE and Personal Injury surveys
    • Interviews
  • Further reading
  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
  • List of Tables
    • Table 1: Number of personal injury claims made to general insurers, split by accident and disease, 2002-7
    • Table 2: Personal injury claims split by insurance category, 2005-7
    • Table 3: Number of personal injury claims made to general insurers, split by accident and disease, by insurance category 2006-7
    • Table 4: Number of motor personal injury claims, 2001-2 to 2006-7
    • Table 5: Average motor claims payout and percentage of claims with a payment by type, 2006
    • Table 6: Average cost of a motor personal injury claim, 2002-6
    • Table 7: Motor bodily injury claims volume and average amount, 2002-6
    • Table 8: Personal injury claims costs as a percentage of motor GWP, 2002-6
    • Table 9: Personal injury claims costs as a percentage of total motor claims costs, 2001-5
    • Table 10: Total number of road accidents in the UK, 1995-2006
    • Table 11: The number of road accidents relative to the number of registered vehicles in the UK, 1995-2006
    • Table 12: Road accident casualties in the UK, split by severity of injury, 2002-6
    • Table 13: Road casualties by type of injured party, 2005-6
    • Table 14: Number of employers' liability personal injury claims split by accident and disease, 2002/3-2006/7
    • Table 15: Employers' liability gross incurred claims, 2001-5
    • Table 16: Number of claims made to the DTI and total compensation paid for respiratory disease and vibration white finger under the British Coal scheme as of 4th of March 2007
    • Table 17: Profile of offers made by the DTI to claimants for respiratory disease under the British Coal Scheme, up to 4th March 2007
    • Table 18: Workplace injuries reportable under RIDDOR, 2001/2-2005/6p
    • Table 19: Workplace injuries, reportable under RIDDOR, excluding acts of violence, 2001-6p
    • Table 20: Total estimated workplace injuries reportable to the HSE, 2001-6p
    • Table 21: Workplace fatalities reported under RIDDOR, 2001/2-5/6p
    • Table 22: Workplace fatalities reported under RIDDOR, 2001-5p
    • Table 23: Number of applications registered by employment tribunals involving sex, race and disability discriminations cases, 2001-6
    • Table 24: Number of employers' liability claims paid by year of origin, 1995-2004
    • Table 25: Employers' liability claims costs as a percentage of GEP in year of origin, 1995-2004
    • Table 26: Average cost of paid employers' liability claims by year of origin, 1995-2002
    • Table 27: Top 20 personal injury advertisers, 2006
    • Table 28: Top 20 personal injury advertisers, by medium, 2006
    • Table 29: Legal expenses GWP by insurer, 2002-6
    • Table 30: Number of companies applying to the Claims Management Regulation Monitoring and Compliance Unit by intention of business
    • Table 31: Number of companies applying to the Claims Management Regulation Monitoring and Compliance Unit by principal activity of business
    • Table 32: Number of companies applying to the Claims Management Regulation Monitoring and Compliance Unit by company turnover
    • Table 33: Forecast number of personal injury accident claims, 2005/6-2011/12f
    • Table 34: Personal injury claims costs by line of business, 2005/6-2007/8f
    • Table 35: Forecast of total personal injury claims costs, 2005/6-2011/12f
  • List of Figures
    • Figure 1: The number of disease claims registered with the Compensation Recovery Unit declined in 2006-7, however the number of accident claims rose
    • Figure 2: The top 20 advertisers of personal injury services spent 68.7 per cent of their budget on TV in 2006
    • Figure 3: The number of disease claims registered with the Compensation Recovery Unit declined in 2006-7, however the number of accident claims rose
    • Figure 4: Motor-related claims accounted for the largest proportion of all personal injury cases in 2006/7
    • Figure 5: Accident claims made up the majority of personal injury claims across all categories in 2006/7
    • Figure 6: The number of motor personal injury claims increased by 12.8 per cent in 2006-7
    • Figure 7: Bodily injury claims are the most expensive motor claims to settle, however the percentage of claims that are awarded payouts is low
    • Figure 8: The number of motor bodily injury claims rose by 20.6 per cent in 2006
    • Figure 9: Personal injury claims costs have steadily increased as a percentage of motor GWP between 2002 and 2006
    • Figure 10: Personal injury claims costs accounted for over 50 per cent of total motor claims costs in 2005
    • Figure 11: The number of RTAs has fallen every year since 1997
    • Figure 12: Although vehicle registrations rose again in 2006, road traffic accidents continued to fall
    • Figure 13: Road accident casualties continued to decline in 2006
    • Figure 14: Car users are the largest category of injured party in relation to road traffic accidents
    • Figure 15: Disease claims in the employers' liability market have fallen dramatically since 2003/4
    • Figure 16: Employers' liability gross claims incurred declined for the second consecutive year in 2005
    • Figure 17: The vast majority of offers under the British Coal Scheme are below £5,000
    • Figure 18: Workplace fatalities went down in 2005/6p, apart from among members of the public and the self-employed
    • Figure 19: All disease-related fatalities declined in 2005
    • Figure 20: There was an increase in the total number of employment tribunal applications in 2005/6
    • Figure 21: Applications for disability discrimination declined again in 2005/6, however sex and race applications rose
    • Figure 22: Employers' liability claims have a long latency period
    • Figure 23: Employers' liability claims costs can accumulate over time
    • Figure 24: Analysis of employers' liability claims costs shows that they increase over time
    • Figure 25: National Accident Helpline recorded the highest advertising spend for UK legal services products in 2006
    • Figure 26: The top 20 advertisers of personal injury services spent 68.7 per cent of their budget on TV in 2006
    • Figure 27: Profile of Injury Lawyers 4U
    • Figure 28: Profile of National Accident Helpline
    • Figure 29: Profile of Accident Line
    • Figure 30: Profile of Claims Direct
    • Figure 31: Brit was the largest underwriter of legal expenses insurance in 2006
    • Figure 32: The majority of companies that applied for authorization to the Claims Management Regulation Monitoring and Compliance Unit were claims management companies
    • Figure 33: The majority of companies applying for authorization have a turnover between £20,000 and £50,000
    • Figure 34: The number of personal injury accident claims is forecast to rise between 2005/6 and 2011/12f
    • Figure 35: Motor personal injury claims costs outweigh employers' liability and general liability claims costs
    • Figure 36: Personal injury claims costs are forecast to rise to £8.8 billion by 2012