Claims giant warns PI reforms will hit 2017 profits by £4m

One of the UK’s biggest claims firms has warned investors that 2017 profits will be lower than expected as it responds to reform of the personal injury sector.

In a statement to the London Stock Exchange today, National Accident Helpline (NAHL) said operating profits for next year are likely to be £4m down on what was previously declared.

The company assured shareholders the shortfall will be made up over future years as cases settle.

The money will be used to seek out ‘alternative commercial and structural arrangements’ to deal with the government’s proposals to cut or reduce whiplash damages and increase the small claims limit to at least £5,000.

NAHL said in its initial response to the consultation on the reforms that it would seek to play a more active role in the claims sector.

Discussions with law firms on its panel have led the board to believe it ‘prudent to accelerate investment’ in cases under new commercial arrangements.

The company says it will making an ‘exceptional investment’ of £1.7m by the end of 2017 to ensure its brand positioning and processes are ‘aligned to the requirements of the new regulatory environment’. Almost a third of this money will be spent by the end of this year.

This will be offset by an ‘exceptional credit’ of around £1m in 2016 related to the resolution of cases covered by pre-Legal Aid, Sentencing and Punishment of Offenders Act ATE insurance provisions prior to March 2013, after which the act came into force.

The statement adds: ‘The board believes that the actions it has taken and now intends to accelerate will enable NAHL to maintain its position as the leading provider of access to justice for those seeking redress under any new regulatory regime.’

But investors appeared not to share the same enthusiasm: the share price value plummeted 17.2% today to 159.75p per share. This is the lowest value the shares have recorded in five years.

Earlier this week, a personal injury firm became the first to publicly cite the impending reforms as a cause of its collapse.

London-based Kemp Legal Limited went into administration in October and advisory services handling the process said the prospect of the small claims limit rising would result in a ‘significant decrease in viable claims’.

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Claims giant warns PI reforms will hit 2017 profits by £4m