UK Personal Injury Litigation 2004

Transcription

1 A Datamonitor report UK Personal Injury Litigation 2004 Trial and Error Published: Dec-04 Product Code: Providing you with: Detailed examination of the trends in personal injury claims numbers and costs and the legal and legislative developments taking place in the market Use this report to Understand the critical market dynamics of this controversial and continually changing sector, and assess the implications of the compensation culture Analysis of leading accident intermediaries in the after-the-event market and assessment of the future prospects for players in the sector Consideration of BTE market and legal expenses underwriting, including a determination of market size, competitive developments and key market drivers Comprehensive forecasts of claims numbers and costs to predict the future direction of the personal injury litigation sector in the UK

2 An introduction to the report This report provides a detailed overview of the ATE and BTE markets and the development of personal injury claims in the UK insurance sector. It examines the legal and legislative factors that have been impacting the market, assesses the influence of the major competitors and determines how claims numbers and claims costs are poised to develop. Key findings and highlights Reasons to buy Recent legal and legislative developments have restored some much-needed faith in the personal injury compensation system. The report considers what effect these changes are likely to have in the context of the current level of claims costs and numbers. It also looks at the competitive developments in both the after-the-event and before-the-event markets, and discusses the issues surrounding capacity and funding. Datamonitor's forecasts predict future levels of claims volume and costs to enable solicitors and insurers to appreciate the characteristics of this controversial market. In 2003/2004 the overall number of personal injury claims increased, driven by a significant increase in disease claims. The number of accident claims fell by almost ten per cent as a result of a contraction in the number of no win, no fee competitors. The total cost of claims reached almost 6.6bn in 2003, with particularly strong increases recorded in employers' liability claims. Average payouts for claims rose by an average ten per cent during the year, although the introduction of a number of fixed fee regimes should help bring down claims inflation. In the ATE market, a number of insurers have withdrawn capacity. Solicitor networks are a growing trend and are promoting themselves in direct competition to national claims helplines. Meanwhile, the BTE market is growing steadily and significant advances are expected in the commercial legal expenses sector in particular. Understand the critical market dynamics of this controversial and continually changing sector, and assess the implications of the compensation culture Gain insight into the business models of accident intermediaries, their use of advertising and the opportunities for competitors of various types Gauge the future direction of claims numbers and costs and determine what lies ahead for personal injury law firms Contact us... From Europe: tel: fax: fsinfo@datamonitor.com From Germany: tel: fax: deinfo@datamonitor.com From the US: tel: fax: usinfo@datamonitor.com From Asia Pacific: tel: fax: apinfo@datamonitor.com

3 Sample pages from the report BTE Market and Legal Expenses Underwriting The non-motor personal claims frequency has crept up for two consecutive years, however, due to an increased tendency to claim against local authorities for slips and trips in particular. Figure 42: The legal expenses insurance market has reached a plateau of profitability ATE Market 160.0% Ratio of claims incurred/gep 140.0% 120.0% Non-motor Non-motor commercial commercial Accident Line 100.0% Accident Line was created in 1994 by the Law Society as a referral service for solicitors. The following year, when CFAs were introduced, the Law Society endorsed 80.0% Abbey Legal Protection Non-motor Non-motor to personal personal administer the insurance supporting the scheme with a 60.0% product known as Accident Line Protect. In October 2000, in response to the reforms to access to justice, the Law Society appointed Abbey Legal Protection to manage 40.0% the revamped Accident Line. Total Total legal legal expenses expenses 20.0% Motor Motor Accident Line is the only personal injury Market referral Context service endorsed by the Law Society. 0.0% This 1998status lends 2001 the 2002 company a particular credibility, whereby it markets itself as an ethical choice of provider, and one far removed from the discreditable practices of a Source: Datamonitor analysis of ABI statistics number of accident intermediaries DA TA MO NI tarnished TO R by negative media stories. This accreditation acts as a useful carrot in terms of Employers attracting solicitors liability to claims its panel. increased their proportion of the total from 25.9 per cent to 37.8 per cent in In terms of absolute numbers, there were almost 60 per cent more employers liability claims than in The impending cut-off date for the British Coal respiratory disease scheme led to a rapid escalation in the number of Figure 37: Accident Line profile disease claims. After increasing the fastest in , public liability claims fell faster than all other 8,684 main types advertising of insurance spend, claim in This category includes claims against local authorities and provides further evidence to suggest that companies like TAG and 100% Claims Direct had inflated claims numbers in this sector. TV 320 solicitors on panel Figure 5: Brit Insurance Motor and employers liability make up the majority of personal ATE insurer injury claims 600 cases handled monthly Source: Datamonitor Personal Injury Survey Datamonitor (Published 11/2004) Page 124 This report is a licensed product and is not to be photocopied Employers Bank of Scotland liability 37.8% Funding partner Public liability 11.9% D A T A M O N I T O R No liability 0.5% Other 0.3% Caseload generation As a claims referrer Accident Line s main objective is to drive business to its member solicitors via a variety of routes. It maintains good relationships with the Citizens Advice Bureaux and encourages them to refer business Motor directly 48.7% to its members where Clinical negligence 0.9% Source: Datamonitor analysis of CRU statistics Datamonitor (Published 11/2004) Page 111 This report is a licensed product and is not to be photocopied D A T A M O N I T O R Datamonitor (Published 11/2004) Page 31 This report is a licensed product and is not to be photocopied Request more sample pages...for FREE! From Europe: tel: fax: fsinfo@datamonitor.com From Germany: tel: fax: deinfo@datamonitor.com From the US: tel: fax: usinfo@datamonitor.com From Asia Pacific: tel: fax: apinfo@datamonitor.com

4 Table of contents EXECUTIVE SUMMARY INTRODUCTION What is this report about? Who is the target reader? How to use this report MARKET CONTEXT Introduction Personal injury claims numbers - Overall claims numbers continue to rise, though accident claims are falling - Compensation claims split by insurance category Personal injury within motor insurance - Road traffic accidents - Injuries by type of road user - The potential number of RTA personal injury claims - Personal injury claims costs and numbers Personal injury within employers' liability - Workplace injuries - Work-related ill-health - The overlap between employment tribunals and personal injury claims - Personal injury claims costs and numbers Personal injury within general liability - Injuries in the home - Leisure-related injuries - Personal injury claims costs and numbers Personal injury: review Compensation culture: a myth debunked? - The insurance industry: current system has heightened people's expectations - APIL: insurers are perpetuating the myth - Datamonitor's view Legal and legislative factors affecting the cost of personal injury claims - Fixed costs system for RTAs - Fixed success fees in employers' liability cases - Further fixed cost and success fee rulings - Ogden Tables - Courts Act 2003 Recommendations of the Better Regulation Task Force - Regulation - Rehabilitation - Small claims court - Contingency fees Clementi review and the impact on the personal injury sector - Proposed changes - The impact on the personal injury sector - The Law Society has lifted ban on referral fees Personal injury reform in Ireland: lessons for the UK - Aims of the PIAB - The solicitors fight back - What can the UK learn from the Irish system? ATE MARKET Introduction Market context - The development of the ATE insurance sector - Insurance capacity - Funding capacity Competitive dynamics - Advertising spend increased in Television remained the most prominent advertising medium - The market has seen more competitors depart the scene - Solicitor networks are an increasingly common market feature Competitive profiles - National Accident Helpline - Accident Line - InjuryLawyers4U - RAC Legal Services - Other competitive issues Future prospects for accident intermediaries - Legal sector deregulation - Public awareness Future prospects for lawyers - Clementi: a threat or opportunity? BTE MARKET AND LEGAL EXPENSES UNDERWRITING Introduction Legal expenses underwriting - Market size and growth - Claims experience - Legal expenses underwriters Competitive developments in the BTE market - Product extension - Intermediaries...In the wake of the departure from the scene of TAG and Claims Direct, the general public has become less, not more, inclined to pursue a personal injury claim...

5 Future prospects for BTE business - Automatic inclusion - Broker commissions - Underutilization - Commercial market growth THE FUTURE DECODED Introduction Forecasts - Claims numbers - Claims costs The future of personal injury litigation in the UK APPENDIX TABLES Table 1: Number of personal injury claims made to general insurers, split by accident and disease, Table 2: Claims split by insurance category, Table 3: Number of road accidents in UK, Table 4: Number of road traffic accidents and casualties in UK, Table 5: Number of road accident casualties split by severity of injury, Table 6: Road traffic injuries split by type of injured party, Table 7: Potential personal injury claims arising from RTAs Table 8: Comparison of share of injuries and share of potential claims split by road user type, 2002 Table 9: Potential number of successful RTA injury claims per year Table 10: Motor personal injury claims, / Table 11: Motor claims by type, 2003 Table 12: Bodily injury claims volume and amount, Table 13: Personal injury claims as a proportion of motor GWP, Table 14: Personal injury claims as a percentage of total motor claims costs, Table 15: Workplace injuries reported under RIDDOR, p Table 16: Workplace fatalities reported under RIDDOR, p Table 17: Acts of violence within the workplace, p Table 18: Total number of workplace accidents, p Table 19: Number of cases of occupational disease and workrelated mental ill-health, p Table 20: Number of applications registered by employment tribunals including sex, race and disability discrimination, Table 21: Median and average compensation awarded by tribunals for sex, race and disability discrimination cases, Table 22: Number of employers' liability personal injury claims split by accident and disease, Table 23: Employers' liability gross incurred claims, Table 24: Number of employers' liability claims paid by year of origin, Table 25: Employers' liability claims costs as a percentage of GEP in year of origin, Table 26: Average cost of paid employers' liability claims by year of origin, Table 27: Number of home and leisure-related injuries, Table 28: Fixed cost and success fee arrangements for RTAs in ATE market Table 29: Advertising spend of key personal injury competitors, Table 30: Advertising spend of key competitors by medium, 2003 Table 31: National Accident Helpline's monthly accepted caseload, Table 32: Accident Line's monthly accepted caseload, Table 33: Legal expenses premium income by line of business, Table 34: Ratio of claims incurred to GEP by sector, Table 35: Claims incurred and number of claims notified by sector, Table 36: Selection of commercial legal expenses partnerships, 2004 Table 37: Scenario forecasts for personal injury claims numbers, f Table 38: Personal injury claims costs by line of business, Table 39: Scenario forecasts for personal injury claims costs, f Table 40: Prevalence of occupational ill-health by type, Great Britain, /2 Table 41: Legal costs and personal injury claims costs for motor insurers, Table 42: Average cost of personal injury claims by type, 2003 Table 43: Market share of legal expenses insurers, Table 44: Claims handled and awards won by trade unions, Table 45: Datamonitor estimates of the split between ATE and BTE business, FIGURES Figure 1: Figure 2: Key milestones in the development of the personal injury sector RAC and Personal Injury Helpline were particularly active in increasing advertising spend in The [RTA] and [employers' liability] success fee arrangements will deliver measurably more efficient legal cost settlements for the vast majority of cases...

6 Figure 3: The personal injury industry is bullish about future claims prospects Figure 4: A decline in accident claims has been offset by a rapid increase in disease claims Figure 5: Motor and employers' liability make up the majority of personal injury claims Figure 6: The number of RTAs has fallen for six successive years Figure 7: Proportionally fewer vehicles are involved in RTAs than at any time in the last decade Figure 8: The number of casualties is declining year-on-year Figure 9: The number of slight injuries fell for the third successive year in 2003 Figure 10: More passengers and motorcyclists were injured in 2002 than in 2001 Figure 11: Passengers account for the majority of personal injury claims Figure 12: Motor personal injury claims are declining in frequency Figure 13: Personal injury claims are the most expensive form of motor claim but the least frequently paid Figure 14: The severity of personal injury claims is escalating Figure 15: Personal injury claims were worth a third of total motor GWP in 2003 Figure 16: Personal injury claims are making up an increasingly large proportion of total motor claims Figure 17: The number of workplace injuries is gradually reducing Figure 18: Injuries to the self-employed are showing a worrying rising trend Figure 19: Employee fatalities fell slightly in Figure 20: Cases of lung disease are becoming more prevalent while the number of non-lung disease and mental ill-health cases falls Figure 21: There was a significant rise in the number of employment tribunal applications in 2004 Figure 22: Sex discrimination cases are the most volatile Figure 23: has seen an escalation in the number of employers' liability disease claims Figure 24: Employers' liability claims costs are experiencing double digit growth Figure 25: Employers' liability claims have a long latency period Figure 26: Insurers continue to feel the bite from claims years after the date of origin Figure 27: Average employers' liability claims cost increases with time Figure 28: Between 2000 and 2002 there have been more leisure-related injuries than injuries in the home Figure 29: Public liability claims fell sharply in after a rise in the previous year Figure 30: Key milestones in the development of the personal injury sector Figure 31: Figure 32: Figure 33: Figure 34: Figure 35: Figure 36: Figure 37: Figure 38: Figure 39: Figure 40: Figure 41: Figure 42: Figure 43: Figure 44: Figure 45: Figure 46: Figure 47: Figure 48: Figure 49: Figure 50: Figure 51: Claims costs could be reduced by a third with the use of rehabilitation The vicious circle of an incompletely covered ATE market RAC and Personal Injury Helpline were particularly active in increasing advertising spend in 2003 InjuryLawyers4U currently has the largest monthly caseload of all profiled accident intermediaries National Accident Helpline profile National Accident Helpline has almost doubled its caseload in three years Accident Line profile Accident Line's monthly accepted caseload has stabilised InjuryLawyers4U profile RAC Legal Services profile Growth occurred in all legal expenses lines bar non-motor commercial in 2002 The legal expenses insurance market has reached a plateau of profitability The total number of claims increased by 12 per cent in 2002 DAS and RBS Insurance Services together account for half the total legal expenses market The personal injury industry is bullish about future claims prospects Datamonitor's scenario suggests claims costs will rise to over 10bn by Stress and related conditions have increased dramatically since 1995 Legal costs have remained a consistent proportion of personal injury claims Commercial personal injury claims are generally higher in value than personal claims The number of claims handled by trade unions has fluctuated Datamonitor's core consulting capabilities Contact us... From Europe: tel: fax: fsinfo@datamonitor.com From Germany: tel: fax: deinfo@datamonitor.com From the US: tel: fax: usinfo@datamonitor.com From Asia Pacific: tel: fax: apinfo@datamonitor.com

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8 Interested in this topic? Datamonitor is the UK's leading provider of information on the general insurance industry across Europe. Our portfolio of personal and commercial insurance reports combines all the major data sources on the products, markets and distribution channels in the insurance industry, and the results of consumer research and industry interviews, together with the analysis of our experienced team of insurance experts. Other reports in this series UK Motor Insurance 2004/5 Coming soon! Examines the UK motor insurance market Published: Jan-05 Product code: DMFS1719 UK Household Insurance 2004/5 Coming soon! Examines the UK household insurance market Published: Jan-05 Product code: DMFS1718 UK Personal General Insurance 2004 Supplies a definitive guide to personal lines insurance in the UK, covering individual accident and health, private motor and household insurance sectors Published: Nov-04 Product code: DMFS1689 UK Commercial General Insurance 2004 Analyzes the main lines of commercial insurance and provides market size and profitability data alongside competitor statistics and growth forecasts Published: Nov-04 Product code: DMFS1690 Claims Management in UK General Insurance 2004 Offers analysis of claims management issues across motor, property (domestic and commercial) and liability lines Published: Nov-04 Product code: DMFS1673 For more information on reports and briefs go to: Subscribe to Monitor A monthly update of Datamonitor's new products, delivered to you by . monitor@datamonitor.com

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