In the Media - Slow Recovery or the New Normal? What’s Next for the PI Market
Discussing if the PI market is currently slow or if this is to be considered the new normal - Andy Cullwick, our head of marketing explains;
For those of us working in personal injury (PI), the findings of research company IRN’s latest report on the current state of the market will come as no surprise.
There are small signs of recovery in some areas, but the overall picture shows further decline with only negligible growth predicted for the remainder of this year and next.
The volume of road traffic accident claims, in particular, is still far below what it was pre-pandemic, despite traffic levels returning and actually rising, according to separate analysis by the Association of Personal Injury Lawyers.
Anyone expecting the market to bounce back may have a long wait. The claims landscape has changed so much in recent years that I don’t think we will ever see a full recovery. Rather, firms competing for what is now a smaller pool of work must learn to adapt and be agile to survive.
State of the market
The IRN report, now in its eighth year, recorded a revenue increase of 3.5% for 2022 – to £4.1bn – but said this “hides wide variations in the performances of law firms and claims companies in the sector”.
The providers posting good results were mainly larger firms and there was a continuing decline in the number of active PI firms.
Elsewhere, the number of claims registered with the Compensation Recovery Unit continued to fall, having more than halved in the last decade – from over 1.1m in 2013/14 to 484,300 in 2022/23.
For motor in particular, just under 90,000 claims were recorded in the second quarter of 2023 making it the lowest second quarter of the year on record. While the figure is 45% lower than pre-pandemic levels, traffic volumes for the same period were 3% higher.
All change
The Official Injury Claim portal has, of course, played a part but is not the only reason for the drastic reduction in road traffic accident claims.
As well as many firms ditching lower-value work, finding the tighter margins no longer financially viable, a surge in merger and acquisition activity has resulted in less choice for consumers and I think we will continue to see further consolidation.
Many firms have also radically changed the way they market their services, with a large proportion of advertising now done ‘below the line’ – on social media or targeted search engine campaigns, for example – rather than ‘above the line’ through more mainstream channels, such as radio and TV.
Cost is undoubtedly a major factor but, for sheer reach and general brand awareness, it is difficult to match ‘above the line’ advertising. The knock-on effect of this has been that, in the absence of big budget campaigns on our screens, the general public are perhaps not as aware of their rights to claim as they once were.
The way forward
We are fortunate these days that there are so many alternative and more cost-effective routes to market. Gone are the days when you simply took out an advert on TV, radio or in the local newspaper; now you can target a more specific audience through the likes of social media, SEO, pay-per-click, email and content marketing. The list goes on.
As a general rule, the more channels we use at First4Lawyers, the more leads we generate for our panel firms. That’s not to say that firms have to advertise on every platform, but the key is to continually explore, evaluate and see what achieves the best results.
With further challenges on the horizon in the form of fixed recoverable costs, firms cannot afford to be complacent and must instead learn to be agile, able to adapt not just their ways of working but their ways of reaching prospective customers.
We may not return to the kind of claims volumes we were seeing pre-Covid and pre-whiplash reforms, but savvy firms will learn to adapt and do business in the new normal.
