LONDON (ShareCast) - (ShareCast News) - Investec retained its 'buy' rating and 490p target price on NAHL Group after the Chancellor's Autumn Statement proposed ending the right to cash compensation for minor whiplash injuries and transferring of smaller personal injury claims to the small claims court.
On Thursday, NAHL's shares were mauled as it admitted to uncertainty about the effects of the proposals, consultation on which will begin in the New Year.

There is no certainty that either changes will be introduced, Investec analyst Alex Paterson said, given that the small claims court only processed 70,000 claims in the year to April and would be likely to require additional funding to deal with an additional 0.5 or so personal injury claims.

Paterson also said he believed the changes to whiplash claims would require primary legislation and would not be enacted before 2017, with the transfer of PI claims taking at least a year.

Even if the changes were introduced, the analyst was confident that NAHL's business model can evolve and perhaps even enhance its position as market leader as it would be ideally placed to process claims for the small claims court, potentially at a higher revenue per case than is received indirectly under the current model.

"Minor whiplash claimants would still be able to claim for the loss of earnings and medical care," Paterson said. "We also believe that as the economics of bringing a case will not change for the claimant, claims for cases below £5,000 will still be made and probably with the same growth rate as before."

While the details of any subsequent change are lacking at this stage, Investec remains confident in NAHL's considerable brand strength and marketing skill-set, meaning the opportunity to provide for its considerable customer base will not be significantly weakened by any legislative changes.

One effect would be that NAHL's model would have to change, requiring it to fund work in progress and only receiving cash on case completion.

He also noted that the last change to legislation, LASPO in 2012, resulted in a dramatic increase in cases in the preceding 15 months.

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