Not all Legal Expenses Insurance is created equal
In response to some general criticism of Legal Expenses Insurance (LEI) in the press recently, Nathan Holt, Head of Trading Underwriting at DAS UK, sets the record straight…
A consumer piece in one of the weekend broadsheets caught my eye recently. It’s not that often that LEI makes the big papers, so this jumped out at me – albeit not for the right reasons. The article began as a description of the negative experience of one specific customer but then went on to be fairly broadly critical of LEI as a whole, which was actually really disappointing to read.
Working in the insurance industry, I can completely sympathise with the customer, but I firmly believe that not all LEI products are created equal and, in the current litigious society, a good quality LEI product will offer affordable access to justice that wouldn’t otherwise be available.
Criticism of LEI as a whole
I also can’t help but feel that in cases such as the one mentioned – where a customer was reportedly “passed from pillar to post” with nobody providing help – that not only has the customer been let down but so has the primary insurer.
As LEI is often a white labelled ‘add-on’ product it is fundamental that your LEI provider understands that they are responsible for the reputation of not only their own brand, but also that of the main insurance provider.
If you are an LEI provider, it is also fundamental that you support your customers during their hour of need – as DAS UK does – through legal advice, online legal services, or ultimately of course, litigation if it’s necessary.
A situation can also arise when a business partner changes their LEI provider – LEI can be written on either a ‘claims made’ or a ‘claims occurred’ basis with the former often offering a very small claims window.
This can be particularly unsuitable in a long tail class of business and can often result in a customer being passed between LEI providers before finding that neither can help as they have changed providers since the incident that resulted in a legal dispute – a poor resolution and customer experience mess.
This is very unfair to the customer which is why we offer our policies on a ‘claims occurred’ basis to make sure the customer continues to have cover for that period even if they chose to move insurers.
The benefits of outsourcing LEI
The article also criticised the outsourcing of such services, asserting that it is confusing and makes life difficult for the customer. I would argue quite the contrary, provided you have a comprehensive service proposition and the right LEI provider.
Legal disputes and the expenses that can arise have the potential to be very complex and expensive matters, and it is vital that these services are provided by appropriate experts supported by suitable literature.
It should always be clear within a customer’s documentation who is providing these services and our general experience with customers shows that as long as you take ownership, show compassion for their issue, and provide expert, clear and honest advice then they generally have no issue with a service being outsourced. This again demonstrates the importance of partnering with the right LEI provider.
Good policies and bad policies
As we’ve spoken about before, the value and quality of legal expenses policies can vary greatly. Some offer limited value to a customer, having numerous waiting periods, limited claims windows or restrictive cover. With policies like these, even if you have a valid insurable dispute, it may be impossible to make a claim due to an economic exclusion clause (where the amount in dispute is less than the legal costs to pursue).
As an industry expert, this saddens me but I am proud that this is not the type of LEI provided by DAS UK. As a company we are proud of the quality of our offering, delivering and improving our products and removing barriers to better align customers and business partner expectations with the products and propositions we offer.
For us, both of our customers are important; the policyholder who has purchased the product and expects us to help when they have a legal query or dispute, and the business partner to whom we have been entrusted to provide this promise to their valued customer.
DAS Group UK has been a pioneer of the legal expenses insurance market since the concept was first introduced to the UK in 1975. DAS provides protection against unforeseen legal costs to millions of families and motorists, and hundreds of thousands of businesses every year, offering both before-the-event and after-the-event insurance products and a range of telephone advice and assistance services, including the flagship legal advice service.
DAS is an authorised and regulated insurance company, based in Bristol, with offices in London, Manchester and Bedwas, South Wales, as well as subsidiaries in Arundel, Dublin and Toronto. DAS employs some 600 staff and has become one of the UK's leading specialist insurers.
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