The following provides information as to why Quindell business model for dealing with hearing loss claims is on track to deliver significant returns.
Size of the Hearing Loss Claims market
1. Noise level for making a hearing loss claim reduced to 80dB in 2006 thereby increasing size of market.
2. Over 10 million people in the UK suffer from hearing loss. Predicted to rise to 14 million.
3. On average it takes 10 years for somebody suffering from hearing loss to make a claim.
4. Market growing as population become more aware of issue.
Industry statistic is 80% of hearing loss claims fail. QPP indicate their business will be more successful than the industry average.
Why Quindell believe they will outperform the market
In the 13th October 2014 Q3 trading update Quindell had the following paragraph:
Internal Business Review of NIHL settlement timings being conducted in Q4 due to first few settlements already agreed in Q3 being ahead of plan and at amounts higher than existing accrued income policy.
They also stated the review and potential positive impact to H1 2015 cash flows will be announced on or prior to the year-end pre close statement.
It is believed Tony Bowers, now deceased was leading the review, so the outcome could be slightly delayed.
1. QPP reject over 70% of cases before they take on a case = more successful cases.
2. Quindell are supplied claimants by Claims Management Companies. Contracts between Quindell and some CMC’s give QPP right of first refusal. This means Quindell success rate will be higher than competition. Competition will also be progressing claimants Quindell have rejected.
3. CMCs must replace any claimant who has been rejected by Quindell with another at no cost.
4. Some Quindell cases fall outside the Ministry of Justice’s Claims Portal. This means to create £9000 revenue only one claim needs to be progressed rather than four.
5. Q3 trading update indicated repudiation rate of c 91% being achieved.
Quindell costs and revenue predictions are predicted to be better than the industry standard for the following reasons:
1) High volume production line of cases.
2) High quality of cases.
3) Cost of acquisition for each case lower than their competitors.
4) Disruptive business model.
The logic and business model is robust. Time will tell if Quindell achieve the success rates required to achieve the revenues predicted. The awaited outcome of the latest review will provide the evidence.
The indicators are positive.