Legal disputes, legal expenses insurance and access to justice

The Ministry of Justice has just released civil justice stats for July to September 2017
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/665073/civil-justice-statistics-quarterly-july-sept-2017.pdf
An increase in claims is evident – in fact a 13% increase over the same quarter last year and this is driven by 15% increase in the number of specified money claims which stand at 560,000 – the second highest number since 2006.
70% of money claims involved sums in dispute of less than £1,000.
The number of cases which are contested and proceed to a trial has increased by some 11%.

The figure I picked up on is that where claims were defended, 56% had legal representation for both claimant and defendant (down one percentage point from July to September 2016), 24% had representation for claimant only (up one percentage point over the same period), and 3% for defendant only.  This points to a considerable gap in affordable access to justice which is the tip of an iceberg. It is impossible to know how many individuals and businesses are deterred from pursuing claims or putting forward a defence by cost barriers and/or lack of confidence and time required to manage their litigation. 
The CJC’ s recent information study, “The Law and Practicalities of Before-the-event (BTE) insurance” found that “BTE offers large numbers of people access to significant assistance, including via legal helplines (and, less commonly, legal websites)”.  https://www.judiciary.gov.uk/publications/cjc-publish-report-on-before-the-event-legal-expenses-insurance/

Businesses and individuals can quickly recognise savings that exceed the premium they paid for their legal expenses policy by down loading free legal documents and using our helplines.  The barrier to recognising the considerable value of products is lack of awareness of the benefits available.  I am optimistic that awareness is beginning to improve and the CJC’s information study could be influential in contributing to this. More importantly brokers have a huge part to play in helping customers to fully understand how products can help them.

This leads me on to Insurance Product Information Documents. Just a reminder, if you are selling a “standard ”ARAG product  log into our website to down-load our new Insurance Product Information Documents. If the product you are selling is not quite standard we will modify the relevant standard document for you to ensure that it is suitable and send you a customised IPID document.
If you are a product manufacturer and have ARAG cover integrated into your products please get in touch with your broker account manager or me if you would us to supply or approve ARAG content for your IPIDs.

Audit Trail to London

The ISO27001 (Information Security Standard) is managed by a small team, comprising of IT Management (Bob Moreton, Ben Clarkson) and six internal auditors drawn from various departments within the company. The Auditors have been instrumental in ARAG annually retaining this important certification for the last three years.

In recognition of the team doing it “for the love” (as they all have very busy day jobs) they were recently rewarded with a trip to London. First stop on this whistle-stop tour was a visit to the Lloyd’s building in the City of London, kindly arranged by our Underwriting partner Brit, where our team were educated on the history of the market’s roots in maritime insurance and shown around the famous boxes. Our team thought it was interesting to note that the visitor seats that the brokers sit on were shorter and more uncomfortable than the box seats, perhaps demonstrating a position of power and of time constraint!

This was followed by another tour, this time at Brit’s nearby offices in the fabulous Leadenhall Building, although some of the team weren’t so keen on being whizzed up in the glass sided, super-fast lift to the 40th Floor and feeling like it was only just clinging to the outside edge of the building.

Of course, there is no such thing as a free lunch so the team then carried out an audit of the ARAG London office (which opened in 2016) and falls within the scope of the ISO certification. The audit includes ensuring the physical security of the office by querying the visitor process with receptionists, and monitoring the server room which was suitably air conditioned, so the team were unsurprisingly quick in completing this audit - brrr!

To follow on from the earlier maritime theme, the team were rewarded with drinks at The Oyster Shed and dinner in Borough Market, followed by a sleepy train journey back to Bristol.

Many thanks to the whole team for a fantastic day and their hard work throughout the year!

The team includes:

• Ben Parkinson, Broker Account Handler
• David Caines, BTE Underwriter
• Fran Box, Learning & Development Coordinator
• Johanna Graham, CMU Team Leader
• Jordan Wall, Compliance Advisor
• Nigel Sobers, ATE Senior Claims Handler

What the whiplash proposals mean for Legal Expenses Insurance - explained by Andy Talbot, Head of Sales at ARAG plc.

Those outside the legal and insurance worlds would be forgiven for knowing nothing about the government’s plans to reform the claims process. Whisked through ‘consultation’ in just a few weeks, the MoJ’s plans went from launch in mid-November to inclusion in the Prison and Courts Bill, published on February 23rd 2017.

The changes will increase the Small Claims Court limit for all motor personal injury claims to £5,000 and double the limit for all other injuries to £2,000, as well as introducing low, fixed payments for all but the most serious ‘whiplash’ injuries. They represent some fundamental changes to the justice system and are likely to have a major impact on injured parties, the courts and some law firms, but what do they mean for the legal expenses sector?

Andy Talbot, Head of Sales
Successive governments have backed LEI as a means of delivering access to justice, as legal aid has been withdrawn, especially since Lord Justice Jackson floated the idea, back in 2010. But I’m not sure politicians fully understand how it works.
The problem is always that those who struggle to access justice are less likely to have a legal expenses insurance policy.
They are the same people who will suffer most from these changes.

An increase in the Small Claims Court limit has been talked about for years, and is probably overdue. Doubling it will have some impact on non-motor claims costs but it shouldn’t be too dramatic. This is where most of ARAG’s BTE business is, so we’ll be watching with interest and keeping customers informed as the change approaches.

The impact on the market for motor legal protection will be much more significant. It’s estimated that the changes will bring about 90% of motor claims into the Small Claims Court jurisdiction, where costs are not recoverable. These costs will inevitably increase motor legal expenses insurance premiums.

Whatever the rights and wrongs of the status quo, it is difficult to overstate how significantly the reform will disadvantage people genuinely injured in accidents. They will have to trust the third-party insurer to admit liability as, even with the legal knowledge to do so, the cost of challenging an insurer’s denial would quickly exceed the potential award.

This will obviously make motor legal protection much more valuable, but also a bit more expensive, as the costs of challenging a contested claim will no longer be recoverable. Whether consumers will appreciate the increased value that LEI policies offer, because there will be no other means to pursue a claim, remains to be seen.

It is at times like these that ARAG’s focus on service and innovation serves us well. Whatever the finer detail of the reforms and however consumers respond, I know that my colleagues in our Product Development team will build the most attractive proposition available, that will add great value to our partners’ products.

As Head of Sales, I must admit to being slightly relieved that ARAG doesn’t have too many eggs in the motor LEI basket, as it is shaken up, yet again. On the other hand, I’m also excited at the opportunity the latest reform will present. Throughout the world, ARAG is still very much driven by its founding principle of providing affordable access to justice, and equally committed to our belief that investment in innovation and offering the very best service, is the most effective way of achieving that.