As more injury claims fall under fixed recoverable costs rules, 2024 will see plaintiff solicitors seeking creative ways of maximising the value of claims.

For insurers, one of the primary focuses of 2023 has been managing inflationary factors that have driven up claims costs. While motor claims frequency dipped during the pandemic, volumes are now rising back towards pre-pandemic levels and claims costs have increased materially. While the rate of inflation in the UK seems to have slowed or stabilised, everything is more expensive than it was two years ago – and that will not change. The costs of therapy, nursing, vehicle repairs are all up while the value of peoples’ salaries is down.

Social inflation, as opposed to economic inflation, remains an ongoing factor in price rises. (Social inflation is the increase in claims costs above and beyond that created by economic factors.) This is, in part, driven by plaintiff solicitors seeing their business model put under pressure.

In short, the reduction in claims will affect solicitors’ revenues while the introduction of the threshold for fixed recoverable costs places additional pressure on solicitors to focus on higher value claims. The net result of this is that Clyde & Co’s catastrophic injury and large loss team is seeing more functional and psychological issues; more subtle brain injuries while, in tandem, the courts are placing greater emphasis on vulnerability. This is significant because vulnerable claimants are one of the exemptions to the fixed recoverable costs regime. Chronic pain conditions also seem to be on the increase; the UK’s National Health Service is reporting a 21% increase. In addition, exaggerated claims increased by 8% on an all-time basis and month-on-month, a 15% increase in October.

The signs clearly point towards 2024 as a year in which many injury claimants will present conditions that elevate the value of their claims above the threshold for recoverable costs.

There is also the uncertainty of the Ogden rate review in 2024 adding complexity – the discount rate used to calculate the long-term value of personal injuries. There is a chance the rate may increase and ameliorate the impact of inflation, but if it does not, then this will potentially lead to another significant cost increase for insurers.

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