A quarter of personal injury firms have stopped doing low-value RTA work in response to reforms of the sector, a survey has found.

The poll of around 100 firms found a further fifth of firms have diversified into other PI work or other areas of law, while one in 10 are looking to exit the market altogether.

Official Injury Claim, the whiplash portal for handling all RTA claims under £5,000, was launched in May 2021 and figures continue to show that the vast majority of people using the scheme did so through a lawyer.

But despite consumer demand for legal representation, wafer-thin profit margins and a fall in the number of claims has forced many out of the market for this type of work. Claims management company First4Lawyers, which carried out the survey, estimated that around a dozen firms between them now account for two-thirds of all claims registered with the OIC, marking a huge turnaround from a diffuse to a consolidated market.

Other problems with the new system are reported by those firms polled: 28% feel that insurers are trying to take advantage of claimants and only 11% think they have been ‘playing fair’.

Around 70% of firms with experience of using OIC agreed that the technology was not ready to go live and there were still problems with the service.

Just under a third of firms in the survey (30%) are considering a possible acquisition or merger over the next 18 months, with half of them either currently in talks about a possible deal or actively seeking one. The main reason they cited for doing so is to become a bigger business, mentioned nearly three times as often as the next option, investment in technology.

First4Lawyers’ managing director Qamar Anwar said: ‘With the government seemingly intent on pushing through further reforms, the challenges look set to continue unfortunately. But if PI lawyers have proven nothing else since the waves of change that have hit them since 1999, it is that they are incredibly resilient.’

Sales and marketing appears to have become more important since the portal came into operation, with 58% of firms saying they had increased their budget over the past 12 months and 60% expecting to increase it in the year ahead. Activity was largely focused on websites, content and search-engine optimisation – namely where the firm appeared in Google’s rankings.

Quarterly statistics for the OIC, covering the period ending 30 September, show that 351,409 claims had been submitted – a significantly lower number than pre-reform.

Of the 71,191 claims registered in this period, 6,378 (9%) were made by unrepresented claimants and 64,813 (91%) had professional representation. These proportions have remained largely unchanged since the portal went live.

A backlog of cases continues to build up as lawyers and insurers wait on clarification on damages for so-called mixed injuries – where claimants have whiplash (subject to a tariff) and other injuries (which are not). Two test mixed injury claims have been identified from the county court and moved straight to the Court of Appeal, which is expected to clarify what claimants in this position can secure in damages, and in turn what deductions lawyers can make.

 

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