Note - this is joint meeting with the APPG on Insurance and Financial Services Chair: Tom Tugendhat MP Meeting held in Conjunction with APPG on Financial Services. Discussion on Legal Expenses Insurance Eddie Coppinger, Director of East London Legal Advice Centre (LAC), opened the discussion, drawing on LACs experience of using legal expenses insurance to fund employment tribunal work and some housing cases. He argues that LEI is an underused resource. He pointed to the YouGov survey the Legal Ombudsman (LEO) which found that at least 40% of people surveyed had LEI; however only 74% of which did not fully understand the financial coverage they were entitled to, and only 11% of those surveyed understood the legal services excluded under their policy terms and conditions. 27% of people stated though that they would pay for LEI if the cost was between 50 and 100 a year. Some other Countries jurisdictions/legal systems such as Germany have much wider coverage levels. Cathy Gallagher from the LSBs Legal Services Consumer Panel addressed the issue of consumer choice, and how consumers use - or are introduced to - legal services, drawing from the LSBs tracker survey. From this survey only 8% of consumers said that they actually had a legal expenses insurance policy; however this needed to put into context of consumer choice and knowledge. A fifth (20%) felt that they did not have much of a choice, and one in ten (8%) felt they had no choice at all when deciding on a legal services provider, with family recommendations stand out as the main factor in choosing a provide. A summary of the full research can be reviewed here. http://www.legalservicesconsumerpanel.org.uk/publications/research_and_reports/do cuments/LegalServiceBoardReportbyYouGovV4.pdf Muara McIntosh from the Civil Justice Council briefly flagged up the work that the a CJC working group beginning to undertake on the role which BTE insurance might play in improving access to justice. Finally, Lesley Atu from Arag addressed current issues in the market. She pointed out that the UKs distribution model is through "add-on sales," and for BTE LEI this is in conjunction with an insurance product or embedding LEI within a primary insurance product such as motor liability, home buildings/contents etc. There is also a market for distributing through affinity groups and BTE Products have a limited reach due to this method of sale however there is limited appetite within the LEI industry to produce stand-alone products and market them directly to the general public as in continental Europe (200). ATE is typically sold by lawyers who act under a conditional fee agreement. The FCA's market study of add-on insurance found that
consumers have a poor understanding of insurance products in general and that a
lack of awareness resulted when products were sold as add-ons; consumers lacked confidence when faced with a decision about whether to opt-out of an add-on purchase, and often ended up with products that they did not need. From 1st April the manner in which add-on products are sold has become more highly regulated. In respect of Government policy, the LASPO Act rules on cost recovery has effectively required ATE products to be redeveloped, and premium income has contracted the new regime has led to change of behaviours, and abandoning more cases. This was now a difficult market, especially for clinical negligence with NHSLA ATE premium challenges etc. Many small law firms have withdrawn from personal injury. Employment tribunal fees, enhanced court fees, and changes to recoverability rules in criminal cases for small businesses have all added to costs. The proposed small claims court limit increase will affect price of motor LEI as 90% < 5,000 and costs will not be recoverable. Key points from discussion and policy issues raised from the floor including by Robert Bourne (law Society), Peter Holland (DEF), Tom Jones (Thompsons), and Amanda Finlay covered the following Both distributors and intermediaries including trade unions, affinity groups etc - play a key role in how products are explained and consumer knowledge disseminated. The importance of information clarity and standards, converting the small print into better communications to consumers. Need to reduce the distance travelled between insurer and end-user The market needed to adapt better to the new recoverability and cost-shifting rules `