Minster Law is ‘prepared for the future’ despite financial challenges

While the Official Injury Claim (OIC) portal brought advantages to the insurance industry in terms of fewer injury claims when it came into force at the end of May 2021, this same result also brought challenges for the claimant lawyer sector. 

The immediate post-reform world, coupled with a significant drop in claims volumes during the pandemic and resulting from the OIC portal, has impacted the financial peformance of law firms involved in this sector. 

Soft tissue injury claims volumes have remained low since the introduction of the portal and the pandemic, with the latest data from the Ministry of Justice showing that just 25,469 claims were entered to the portal in March 2023. This number has remained largely stable – albeit with slight growth month-on-month – at a figure much lower than the pre-reform environment saw.

The OIC portal was designed enable litigants in person (LiPs) to process their own whiplash injury claims following a road traffic accident, with claims awards based on a corresponding tariff table that aligns compensation with injury recovery times.

Commenting on this post-reform world, Shirley Woolham, chief executive at Minster Law, told Insurance Times that she had noticed a “more clear-eyed eyed agenda” from insurers.

“The landscape has become perversely more complex, but the agendas have become more straightforward,” she explained.

According to Woolham, the OIC portal has reduced the number of suppliers in the market, leading to insurers’ agendas becoming “simpler”.

These agendas are now more clearly focused on “managing claims costs and keeping them down”, she said. 

The number of personal injury law (PI) firms operating in the market has reduced since the introduction of the Woolf Reforms in 1999, with only 284 registered with the OIC in 2021 – this was down from 2,000 firms operating in the market in 1999.

Woolham said she believed that this represents an unprecedented hollowing out of the industry – something that may continue in the face of lower claims volumes on the OIC portal.

Of the 284 PI firms registered with the OIC, 83% of claims were submitted by just 12 firms. 

Despite this, Ian Leech, chief executive of Minster Law owner BHL Holdings, said: “We are hugely excited by the opportunities for Minster Law and the wider group after the industry completes this period of transition.

“It is our role to look beyond the short term and provide the backing, in both working and investment capital, to enable management to develop a market-leading proposition for our customers and partners.” 

Recuded income

Due to the aftermath of the OIC portal and reforms, Minster Law reported a loss before tax of £1.5m for the 2021-22 financial year, an improvement from the previous year’s loss of £4.2m.

While the company said its turnover of £28.3m was “in line with plan”, this figure reduced from a 2021 figure of £28.7m, reflecting reduced income from low value, high income claims resulting from the reforms introduced in May 2021.

This led to a decrease in gross profit from 25.8% in 2021 to 19.9% in 2022.

Additionally, there was an increase in administration costs from 28.7% to 30.5%, driven by increased case duration.

Woolham told Insurance Times that Minster Law forsaw the loss and that “no one should be surprised.”

”Nobody can be in any doubt that this is a challenging market, but neither we nor our shareholders ever pretended it was going to be any different,” she added. 

She added that despite the loss reported, Minster Law remained positive based on its “strong” balance sheet.

Looking ahead, Woolham said Minster Law would explore opportunities to increase market shares and develop “long-term strategic partnerships.”

The firm’s new partnership with AA is an example of this approach to “target further growth” with ambitions to build market presence, she explained.