Motor claims market recovery stalls as volumes hit record low

Posted by Andy Cullwick, head of marketing at Legal Futures Associate First4Lawyers

Cullwick: Other types of claim replacing RTA

January – the month that gave us Blue Monday, reportedly the most depressing day of the year – also brought more bad news for those in the RTA sector.

The latest figures from the Compensation Recovery Unit (CRU), obtained via a Freedom of Information Act request by the Association of Consumer Support Organisations, revealed the number of motor injury claims last year had fallen to an all-time low.

Just over 350,000 claims were recorded, what some would call a negligible drop from 2022, but a significant slump from five years ago when the volume was almost double.

While hardly surprising – the number of claims has been steadily declining since Covid – what it does perhaps show is a plateauing of the market. The recovery we had hoped to see has failed to materialise. The question is, what happens next?

The ‘rise’ and fall of RTA

In 2018, the CRU recorded in excess of 667,000 motor injury claims before the market was dealt the double blow of the pandemic and the whiplash reforms.

The Civil Liability Act was supposedly passed to help weed out fraudulent claims and make it easier for genuine victims to seek compensation.

While road traffic has returned to post-pandemic levels, however, the volume of motor injury claims has not. Various reasons have been mooted – people are having fewer accidents, are simply just not as aware of their rights or are struggling to find representation.

According to our annual State of the Market survey, many law firms have exited the lower-value RTA market, which was the driver for First4Lawyers launching our own RTA-focused law firm First4InjuryClaims, so we could continue to offer support to consumers who faced being unrepresented in these types of claims.

The bigger picture

With reforms forcing firms to do more for less, are they being more selective when it comes to the mix of claims they are taking on? It’s a starter for 10, although the volume and quality of non-RTA leads we are seeing and passing onto our panel firms at First4Lawyers suggests this is not the problem.

The CRU figures do not paint a positive picture, particularly for RTA, but it’s not all bad news either.

While motor is down (352,230 claims in 2023 compared to 370,645 in 2022), other claims volumes are up, including clinical negligence (14,918 from 14,696), employer’s liability (44,296 from 43,346) and public liability (57,372 from 51,610). The increases are modest, but are increases nonetheless.

New categories of claims are emerging all the time. The market will always innovate, and we have already seen many firms diversify into other areas including recent trends such as financial mis selling and housing disrepair.

We are likely to see others too, such as healthtech claims arising from the use of defective medical devices or failings when the data they provide is not interpreted correctly.

We may not see the motor injury market bounce back to the way it was pre-pandemic, but personal injury firms must now look forward and decide where their focus is going to be.

Motor marketing

The evolution of marketing has led to adverts becoming far more targeted at those most likely to use the products or services they promote. Technology has opened up more channels, many more cost-effective than traditional advertising platforms such as television and where the return on investment is much easier to quantify.

They do not, however, have the same reach. Just look at Mr Bates vs The Post Office, the recent ITV drama which told the story of the Post Office scandal. It was an extraordinary tale but the biggest surprise to many was that the greatest miscarriage of justice in British legal history had been going on for years.

An independent public inquiry into the Horizon IT scandal was established in 2020, but it took a TV dramatisation for the nation to sit up and take notice.

Within a week, many more victims had come forward, more than a million people had signed a petition calling for the former Post Office CEO to be stripped of her CBE, and Prime Minister Rishi Sunak had vowed to introduce a new law to “swiftly exonerate and compensate” those affected.

ITV had also seen its highest audience figures for several years, with upwards of 10 million viewers watching the final episode. A slot in the ad breaks may have cost many thousands of pounds but would have paid dividends in terms of reach.

Even acting royalty Toby Jones may struggle to turn the whiplash reforms into primetime viewing, but TV advertising still has the capacity to communicate to a mass audience in the way that most other platforms do not.

Many firms have switched off when it comes to TV due to the significant budget it demands, but maybe a collective effort is what’s required to educate consumers on their rights. Without that, the motor injury market is likely to stay the same or shrink further in the future.

A version of this article first appeared on Insurance Claims.


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