Some improvement in personal injury market in 2021/22 but still uncertainty for many firms
05 Aug 2021
Value growth in the personal injury (PI) market stalled in 2020 as the pandemic hit claims numbers and revenues for many firms while cashflows were impacted by delays in completing cases. There was a 1.5% decline in market value in 2020 although larger PI firms performed much better than the rest of the market.
The last 12 months have seen the divide between the larger players and many of the smaller firms grow even further: most of the larger firms have invested in customer-facing online systems to continue to operate in the new small claims regime while many smaller firms will have to make some major decisions, if they have not already done so, on whether they can continue to operate in the RTA claims sector. At the very least, if firms decide to stay in the PI market then we can expect a restructuring of many PI teams and redundancies. There will be more diversification into new claims segments but what is not clear is how large these specific sectors can be and, as more firms move into these markets, competition will intensify.
The latest figures for 2020/21 from the Compensation Recovery Unit (CRU) emphasise the impact of the pandemic as cases registered have fallen across all categories but especially for motor claims. The number of cases registered was already falling before 2020 but the decrease has been exacerbated by COVID-19. In the year 2020/21, total cases registered were 564,359, a decrease of 32% on the previous year. Motor-related cases registered dropped to 446,976 in 2020/21, a 32% fall on 653,052 cases registered in 2019/20.
Demand in most of the main PI claims sectors is expected to increase marginally in the second half of 2021 in particular and to increase at a stronger pace in 2022, albeit from a very low base in 2020. Market value is expected to grow modestly by 1.8% in 2021. Market revenue growth should start to improve even further in 2022 and beyond.
Despite the repercussions of the pandemic and the launch of the new small claims limit in May 2021, PI practitioners are slightly more optimistic than a year ago although a majority still have concerns. The results of an annual survey of 60 personal injury practitioners carried out in June 2021 are included in the report:
- 18% of firms surveyed experienced reduced workloads in the last year, the same as in the 2020 survey. However, the percentage experiencing an increase in volumes increased to 42% from just 25% in 2020.
- There are 47% of firms that are expecting PI workload to increase in the next 12 months compared to 43% in 2020.
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