BUSINESS UPDATE – Q2

Arc Legal responds to the Law Society survey on Legal Expenses Insurance

Richard Finan, Director of Arc Legal Assistance, has commented on the Law Society’s plan to survey its members on Legal Expenses Insurance (LEI), stating that the customer must always be the priority when considering the effective use of cover. While deliberate attempts to impede customer’s freedom to choose a solicitor should be exposed, non-panel solicitors must not confuse sound commercial decisions and good customer service practice by a Legal Expenses provider with dishonesty.

A Legal Expenses provider’s two main areas of focus are the provision of a high quality service to claimants, whilst controlling costs wherever possible. Panel solicitor firms have the relevant experience and have invested in efficiencies and technology to deliver customer-centric and cost-effective consumer legal services. Non-panel firms at present cannot compete on this basis, and therefore there will always be a drive for LEI providers to recommend a panel firm to their customer.

Whilst some Legal Expenses providers use their own in-house law firms with no independent managing agent, we use an independent, external panel firm at all times, which we believe reduces the potential conflict between commercial underwriting consideration and the legal merits of a claim.

Should add-ons be a separate product?

Richard Finan, Director of Arc Legal Assistance, has been discussing whether add-ons should be separate products.

Providing Legal Expenses Insurance (LEI) as a part of an underlying policy helps spread the risk, which has a direct impact on premiums. When compared against a standalone policy, there is also a risk of adverse selection, as evidenced where mid-term inclusion of LEI when sold as an add-on usually results in a higher claims incidence. The high proportion of claims made, and rejected due to exclusions or coverage issues from mid-term inclusion of cover demonstrates the issue created by adverse selection on standalone cover.

The impact of retail activity will also inevitably result in a high cost for consumers, whereas add-on products are provided by a retailer as part of a portfolio of products, enabling the costs can spread over various products. Whilst Germany is one example where standalone Legal Expenses Insurance is widely purchased, UK research has suggested that consumers would not be willing to pay moderately higher premiums to purchase the policy as a standalone product.

The story first appeared in Post Magazine on 15 May 2014.

Arc Legal’s specialist pharmacists’ Legal Expenses cover addresses prosecution risk

Arc Legal Assistance has been appointed by NPA Insurance to provide a specialist Legal Expenses Insurance (LEI) product covering UK pharmacists against the specific risks they face, including representation at disciplinary investigations and cover for legal costs arising from criminal prosecution defence.

NPA Insurance is a specialist subsidiary of the National Pharmacy Association, and provides a range of insurance products created specifically for pharmacy professionals.

The LEI coverage operates in conjunction with the pharmacist’s underlying Professional Indemnity policy, providing them with immediate access to a specialist solicitor for assistance in regulatory or criminal matters, whilst the Professional Indemnity policy provides coverage to protect the pharmacist from any liability arising from the matter.

Arc Legal has also included some new aspects of LEI not previously available to NPA Insurance customers including Identity Fraud and Social Media Defamation covers. In addition to the Professional Indemnity LEI cover, Arc Legal is providing Family LEI and there is a Domestic Emergency Insurance product offered, as part of NPA’s Household Insurance policy.