D-ARAG-ON RACERS!

On Sunday the 10th of June our team of Viking warriors, the D-ARAG-ON RACERS, took part in the Bristol Dragon Boat Festival. This festival is an annual event organised by the Rotary Club of Bristol in order to raise money for Caring in Bristol, a charity to benefit the homeless.

After weeks of training an elite team of 20 D-ARAG-ONS took to the high seas (well, the Bristol harbour) and raced against 29 other teams to see who could cover 200m in as short a time as possible. We had three attempts at this and got better with every run. Our final round we were over 5 seconds faster than the first!

Whilst we came 27^th out of 30 we still had a great time on the day, raising money for Caring in Bristol and our charity of the year Focus. We managed to raise £1,182.50 (including Gift Aid) in advance and even more on the day in cash donations from fans and supporters.

We also had an ARAG yellow gazebo set up by the water all day with our Head of Sales, Andy Talbot, flipping burgers for hours on end to keep the hungry D-ARAG-ONS and their friends and family fuelled up for the races.

It was a really great day, with fantastic weather and a lot of fun had by all. And we were watching the techniques of the best teams, so we’ll do much better next time!

If you'd like to donate towards this great cause you can do so by clicking here to go to our Virgin Money Giving page.

Click here to watch the team warming up!

Insurance should be a matter of conscience

Lord Chancellor Liz Truss certainly set the front pages alight when she announced that insurers would have to pay more compensation to seriously injured accident victims. Headlines predictably followed the ABI line and screamed about rises in premiums. A few days earlier, there had been almost no mention of the Ministry of Justice’s (MoJ’s) decision to ‘fix’ whiplash claims and raise the small claims court limit so high that legal representation would be either unavailable or unaffordable in a large proportion of cases.

Some of the details are still a little sketchy but if we have the motor accident threshold set at £5,000, some 90% of road accident injury claims will be ‘small’ claims where legal costs cannot be recovered and around 80% of these will have the whiplash component standardised, with a cap on fees for medical reports. Motor ATE is the most affected in terms of sales potential but BTE premiums will progressively have to rise to pay for irrecoverable costs. The insurance principle of many people paying the claims of a few becomes more difficult to apply if fewer motorists are willing to stump up the extra, taking typical add-on premiums to between £35 and £50.

In respect of clinical negligence and accident cases, are these insurers bemoaning having to pay damages in full the same ones who promised whiplash reforms would actually cut motor premiums? Are they really so callous about the most vulnerable people in society having their life-long care funded adequately – those children who have been injured at birth or motorists maimed and brain-damaged through no fault of their own? The fuss about correcting a long overdue adjustment to the Ogden Tables is shameful: changes are long overdue.

Changes to serious injury rates were talked about over a period of years, with consultation concluded nearly five years ago, while the whiplash consultation was concertinaed into just 6 weeks, over Christmas 2016.

It looks to us like a story is being spun about higher premiums while the victims have no voice. This mood is wrong and reflects badly on society in general. Many insurers’ websites have promises about their social conscience and about treating people fairly. Fine words but little evidence to substantiate them. At ARAG, we are justified in taking the high moral ground. We stand by our mantra, defined by our founder, Heinrich Fassbender, in 1935: “To enable everybody, not just those who can afford it, to assert their rights. We remain committed to equal opportunities for all.”

Which way for ATE and BTE?

We will shortly announce positive results for our trading and profitability over 2016, a new balance to our ATE and BTE exposure, and strategies to both consolidate existing business and build new areas of expertise.
It is clear that the legal framework favours BTE at the expense of ATE solutions. The future ATE focus will be on EL, PL and non-personal injury cases. We are also more clearly identifying good schemes – we now have three full time auditors visiting law firms around the country – with special attention to clinical negligence cases.
On the BTE side, we have to ensure we are not giving away too much for free:
‘extras’ in home emergency, helpline and online services all come at a cost to us and we must ensure our commitment to quality products and service cannot be compromised by concerns over competitiveness of premiums. At the same time, our London office has opened many new doors for commercial BTE schemes because so many businesses fear ever more complex employment tribunal claims.
In all our dealings, we remain committed to ensuring that customers receive excellent value and service, knowing, at all times, that the cover is fi t for their purpose. Management information such as the monitoring of claims declinature and complaints enables powerful root cause analysis that constantly shapes our future policies. This allows us to repeatedly improve the customer experience to maintain ARAG’s reputation for making affordable access to justice available to everyone. 

ARAG moves into criminal prosecution defence

ARAG is offering an innovative Family Prosecution Defence policy to protect individuals accused of criminal offences. The new policy guarantees the right and freedom to have a defence in court.

The cost of obtaining justice can be extremely high, even for those who are completely innocent. Family Prosecution Defence provides first class lawyers, protecting innocent family members of someone who is accused of committing a crime against serious financial consequences– such as the need to re-mortgage or sell the family car to fund a proper defence.

Plugging the defence funding gap caused by a combination of  savage cuts to  Legal Aid, changes to the rules on recovering costs at crown court trial and cover limitations that generally apply to existing Family legal protection products; the new policy extends  to areas such as allegations of dishonesty, violence, uninsured driving and alcohol or drug-related offences. All family members including those studying for further education away from home are covered.

 The burden of proof in a criminal trial lies with the prosecutor who is required beyond all reasonable doubt to prove that the accused is guilty of the charge. We’re here to ensure a quality defence is available so there is no miscarriage of justice.

Where an error of judgement has been made and an individual has been drawn into committing a crime, just as for those who are wrongly accused, individuals still have a legal right to a defence. They have the opportunity to apologise to the court and those affected by their actions. Under these circumstances, when a guilty plea is entered, the court can be lenient when passing sentence, if the judge is convinced of the defendant's remorse.

Family Prosecution Defence will typically be available to boost Family Legal Protection policies for High Net Worth individuals or for company directors and partners as an extension to commercial products, but the new policy is also suited to affinity groups.

 What is covered?

The new policy covers the majority of criminal acts but Class A and Class J offences (homicide, serious sexual offences, offences against children), corruption, money laundering, parking) or repeat offences are excluded. Most importantly, assistance can be sought before an arrest or notice of prosecution is received.

In addition to criminal matters cover is available to provide representation for individuals facing a regulatory investigation or disciplinary action by a professional body. Confidential telephone counselling and legal advice is also provided as well as access to an online consumer legal service website, for legal advice and documentation.

Policyholders are urged to add the 24/7 helpline number to their mobile contact list to ensure immediate representation is available for police interviews.

The number of lawyers prepared to take on legal aid cases has reduced as the rate they are paid makes it unattractive to work in that area, and the courts have realised a huge surge in the number of litigants representing themselves. Our FPD policyholders don't have to worry about that because they have access to the best people to help them and ARAG will be footing the bill.

David Haynes
Head of Underwriting and Marketing

ARAG UK Policyholders are guaranteed fair treatment when they have the right to choose a lawyer to represent them in proceedings.

 The European Court published its decision on 7th November in the case reported on as “The Sneller Case”. This concerned the “free choice of lawyer” in legal protection insurance.

 While some commentators have given the impression that the outcome of the Sneller case is somehow controversial and likely to cause UK insurers to change their position with regard to freedom of choice that isn’t the case for ARAG policyholders who have long since been permitted and always will be able to exercise their legal right to choose. In case you need a refresher here is the back ground to the case.

 Background to Sneller

 The case was referred to the EU Court consequent to a request by the Dutch Supreme Court in proceedings between Mr Sneller and DAS Nederlandse Rechtsbijstand Verzekeringsmaatschappij NV (‘DAS’), seeking clarification on how the EU Directive 87/344 (which regulates freedom of choice in legal expenses contracts and is transposed into national law in the UK by the Insurance Companies (Legal Expenses Insurance Regulations) 1990) should be interpreted.

Mr Sneller was a policyholder of DAS in the Netherlands who wished to use his own lawyer for an employment claim. DAS required Mr Sneller to use its own in-house lawyer on the basis that it is not mandatory to engage a registered lawyer to represent claimants in employment disputes in the Netherlands and the insurance contract limited freedom of choice to cases where a claim must be delegated to external counsel or where in DAS’s opinion it was necessary to instruct an external lawyer.

Mr Sneller argued that if judicial or administrative proceedings are brought, the contract terms must always offer the insured person the right freely to choose his legal representative.

The EU Court judgment

The first two rounds went to DAS, but the European Court agreed with Mr Sneller and ruled that EU law on freedom of choice prevents a legal expenses insurer, which stipulates in its insurance contracts that legal assistance will be provided by its employees, from also providing that the costs of legal assistance provided by a lawyer or legal representative chosen freely by the insured person will be covered only if the insurer takes the view that the handling of the case must be subcontracted to an external lawyer.

 Secondly the EU Court said that this limitation on the rights of legal expenses insurers would apply irrespective of whether or not legal assistance is compulsory under national law in the inquiry or proceedings concerned.

According to this judgment, DAS had restricted the insured’s freedom to choose a lawyer for legal assistance in a non-acceptable way, by reserving the right to decide whether an external lawyer is necessary or not to handle the particular case.

 Regarding the cost impact of this decision (particularly for those legal protection insurers who provide a large part of their legal assistance through their employees) the European Court has explained that the premium might be adjusted or costs payable by the insurer may be limited. In order to guarantee a free choice of lawyer it is not necessary to cover all costs borne by the insured, as long as that freedom is not rendered meaningless.

For detailed information here is a link to the EU judgment.
 http://curia.europa.eu/juris/document/document.jsf?text=&docid=144208&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=509849

 ARAG UK’s position
ARAG UK does not use in-house lawyers to represent claimants. We work with a nation-wide panel of firms that consistently deliver superior levels of customer service that we insist on and have appropriate expertise in the areas of law covered by our policies.

When it becomes necessary to issue proceedings our policyholders can choose their own solicitor if they wish but will be responsible for excessive costs where a firm will not agree to work according to our terms of business which allow for reasonable and proportionate costs. This is also true for applicant employment tribunal cases despite the fact that in common with the Netherlands it is not compulsory for representation to be provided by a qualified lawyer. Freedom of choice does not engage where an insurer covers damages or compensation – as in the case of employment compensation awards cover. 93% of ARAG claimants benefit by having their claim handled by a panel firm

If in the future we were to engage in-house lawyers we recognise that freedom of choice is triggered at the point it becomes necessary to issue proceedings and any such developments would be implemented on that basis.

ARAG ATE policy safeguards claimant

On the 18th January 2013, the High Court overturned an earlier judgment that an ARAG ATE policy was not good enough security for costs.

The bespoke wording expressly stated that the policy would only be void should there be fraudulent non-disclosure (and not for innocent or negligent non-disclosure), and even if there was, the cancellation provisions expressly stated that ARAG would be liable for costs up to the date of cancellation, so minimising any risk to the defendants costs.

The case was not the type to have an adverse verdict at trial, as it centred on technical issues rather than contentious facts, and so there was no commercial reason why the claimant would wish to jeopardise the policy by not complying with its terms. Quite simply, the policy was for the claimant’s own protection.

This case clearly shows that defendants will use the ATE policy as a way of making life difficult for the claimant, but fortunately in this case, the claimant had an ARAG policy that provided the safeguard for the claimant should they lose, and likewise for the defendant.

Permission to appeal has not been granted as yet, and the claimant was awarded the costs of the application.

Make that prospect list and then make it happen!

Now is a good time for insurance salesmen and saleswomen around the land to look down the funnel at the pipeline and see where the new business is coming from.

I have a book of existing business so the first effort is to ensure that this is retained. The problem is that you never will manage to keep all of it. Businesses close or are acquired. People move on and new people with different priorities move in. A book of business will always decline without sales input.

However, your existing book of business is also a great source of new revenue. You need to ask yourself: Do you handle all of their business? Can they recommend you to someone else? As always, diligent efforts will prove to be beneficial.

On the other hand you will also need to target a completely new set of customers to create or renew your database of prospects. Here are a first few steps:

• Define: Your area, your products and what your company wants to achieve.
• Research: Invest the time upfront to save it later down the line by building a comprehensive list of potential contacts with names, job titles, contact details and any other useful information
• Refine: Ensure that your data is clean and remove out of date information. This exercise is as good as any excuse to get in touch with people and will help you to prioritise your list.
• Verify: Does your sales manager agree with your list? Yes? Good! Let’s get on with it.

Unfortunately there is no short cut. You must make contact, you must pursue. Nobody likes it but it is just something that has to be done.

Two further thoughts:

• Don’t outsource prospecting. It doesn’t work!
• Now and then enquiries come to you. Jump on them.

Mutually beneficial outcomes

While there is no definitive number of associations and similar organisations listed in the UK it is estimated that there is well over 300 that are fully staffed and up to a 1000 smaller associations in the UK. For you, the broker, this represents an excellent opportunity to maximise income.

Trade associations have several main functions for the companies that they serve; these include representation, providing economies of scale, supplying information and training. Alongside this associations must work hard to attract new members and retain existing, therefore a range of additional member benefits are offered.

Recently, ARAG has seen a surge of brokers working with associations to provide an insurance offering, including ARAG legal expenses insurance. This growing trend is mutually beneficial for all involved, members receive essential cover with their membership fee, associations can negotiate a competitive rate and for the broker and ARAG we maximise income and grow the business portfolio.

ARAG can provide legal expenses insurance on a commercial or personal basis and most importantly it can be tailored to the needs of industry depending on specific regulatory requirements. It may also be that there are specialist solicitors that the association recommend; ARAG may be able to work with them to provide the cover.

Alongside the legal expenses insurance, ARAG products also come with a range of professional services, such as a 24/7 legal advice helpline and an online document service, helping businesses to concentrate on what they do best.

So, whether you already work with associations or are looking to move into this market the opportunities are there to be taken and a partnership with ARAG means that it is likely to be a smooth and profitable journey!

To find out more either get in touch with your local ARAG Business Development Executive or email chris.french@arag.co.uk

Making the most of BTE

A recent report conducted by the Legal Ombudsman considers two key points in the run up to LASPO’s implementation. Firstly, how before-the-event legal expenses insurance (BTE LEI) is going to fill the gap and secondly how well it is currently placed to do so.

As reported in Litigation Futures, the report commissioned a YouGov questionnaire which found that while, “40% of those surveyed had some type of legal insurance cover”, 74% of these were “unsure or didn’t know what financial cover their policy provided.”

“Concerning” was the word coined by the Chief Legal Ombudsman, Mr Sampson and perhaps rightly so. As a legal expenses insurer we know that we provide high-quality BTE LEI products that are designed around the customer’s needs. We work hard to make our policies understandable to the masses, following the FSA guidelines and provide training to the brokers who are on the front-line selling our products. There are no secrets; it is all down in black and white with Keyfacts in both the point of sale and policy wording.

However, for most it is currently sold to them as an add-on product which tops up the cover they receive in their main insurance purchase, for example car or home insurance. Already there is a barrier as it is likely that the LEI is buried within the main policy wording. Before I started working in insurance, I would simply skim the wording and make sure that the key areas were covered and then hope that I wouldn’t need to make a claim. I am much more conscious now of checking carefully, but I think this is minority when it should be the other way around. Saying that, if I did have a legal issue and needed to consult a solicitor, if the solicitor is doing their job properly they should discuss with the client their insurance details and investigate if BTE is available. After all, you only need the policy at the time of a claim.

Therefore, perhaps it is a general education of the benefits that is required. As found in the survey only 40% of those asked had LEI, in Germany for instance 60% of the population have some form of LEI. The report acknowledges that “legal expenses insurance is beneficial for the simple reason that it’ll continue to allow people to take legal action when they would not otherwise have been able to afford it.”

Landlord’s Emergency Solutions, the perfect pesticide?

Landlords of residential properties will often encounter problems with tenants but what about smaller unwelcome visitors taking up residence? Pests can not only cause damage to a property but create an uncomfortable living environment. There are also difficult conversations to overcome with tenants as to whose responsibility it is to get rid of the pest problem. ARAG’s emergency assistance policy for landlords provides the solution.

ARAG’s expanding range of emergency assistance products includes Landlord’s Emergency Solutions which has been designed specifically for landlords of residential property. This cost-effective insurance product provides assistance from a qualified contractor if an unforeseen event makes the property unsafe to occupy or causes actual or potential damage to the property or its contents. Insured events (see list below) include vermin infestation, something that marks Landlord’s Emergency Solutions out from many others.

• Breakdown of the main heating system
• Plumbing and drainage problems
• Damage to or failure of locks and windows
• Breakage or failure of the sole toilet unit
• Loss of the domestic power supply
• Vermin infestation
• Emergency alternative accommodation for tenants if the property is unsafe to occupy.

So what other benefits can your clients expect? Our helpline is available 24 hours a day, 365 days a year and the costs associated with the call-out charge, parts and materials and labour costs will be covered to an agreed limit. As always there are terms and conditions, but if you would like to offer this product to your clients, do not hesitate to contact us for more information.

QuickQuote re-launch – Quote in 60 seconds

ARAG’s online quotation system for commercial legal expenses insurance has received some major upgrades, and is now known as QuickQuote. This new online quotation engine is designed to make it easier and more flexible for brokers to use.

ARAG was voted “Best legal expenses provider” in 2010 and they were congratulated for their “quick and efficient” online quotation system. However, they have further improved on their original system, which has led to this re-launch of a much more efficient quote engine, thus making it one of the fastest quote-and-buy facility in our market.

QuickQuote offers an extensive range of enhancements, including:

• Quotes in just 1 minute
• Simple application form with keyword explanations, training material and “how to” presentations to guide brokers through the process
• Immediate documentation which can be printed straight from the website
• Quotations and hold-cover notes which can be emailed directly to a broker’s email for convenience
• New search facility for existing quotations, making it easier for them to be found, edited and resubmitted
• Variable commission rate for brokers, from 0-25%
• No claims discounts, different levels of indemnity and hold-cover options

“The majority of ARAG’s business arrives under scheme arrangements, although the demand for standalone polices remains high.  A significant number still require individual rating, this is what we had in mind when we enhanced the QuickQuote facility,” says Andy Talbot, Head of Sales at ARAG.

Access to QuickQuote is restricted to agency partners of ARAG, if you are not currently an agent with ARAG; find out more on our website: www.arag.co.uk

Added value products – getting it right

Having run an insurance brokerage in the past, I still remember the regular letters from my motor insurance providers telling me that they were reducing my motor commission. As income from that source was under constant downward pressure, it was only natural that you would examine all of your options for maintaining or even boosting income. Therefore, the ancillary products which sat alongside the main policy became of critical importance to balancing the books.

The days of having an all-inclusive price for the main policy and all of the additional add-on products, such as legal expenses, are over. Nowadays, it is common sense that customers should know how their insurance premiums are made up.

Mandatory commission disclosure did not happen but high margins are causing concern among our betters. The FSA is now on the case and no doubt their successor will follow suit, so now is a good time to make sure your house is in order.

Here are a few thoughts to be going on with:

1. Optional add-on insurance: State this clearly and price it separately
2. Compulsory add-on insurance: Clearly point this out to the client
3. Preferred provider(s) for add-on insurance: Think carefully if the sale is advised or non-advised and reflect this in your terms of business
4. Mis-selling scandals: Avoid this by backing up your add-on insurance with a ‘demands and needs statement’
5. Documentation: Ensure that your clients receive the correct documentation for the policy they have bought
6. Margins: Consider carefully what a reasonable margin would be
7. Find out more: For further advice, facts and figures on selling optional add-ons read the FSA report: http://www.fsa.gov.uk/pubs/other/factsheet_extras.pdf

Ultimately, we should all consider if optional add-on products are genuinely useful for the client and not just a vehicle to increase revenue. I used to think to myself, would I sell this to my mother? If so, at what price?

If revenue from commission and optional extras is not enough, there is always the administration fee. But that is a whole other subject….

John Gray, Corporate Development Executive
Find out more about ARAG legal insurance products

Matrimonial bliss or matrimonial miss!

The latest statistics from the Office for National Statistics show that the number of divorces in England and Wales is unfortunately on the rise, with an increase of 4.9% from 2009 to 2010.

In real terms the figures have risen from 113,949 divorces in 2009 to 119,589 in 2010, this is equivalent to 11.1 divorcing people per thousand married population.

Alongside this dissolutions of civil partnerships are also increasing with provisional total of 509 in the UK in 2010, an increase of 44% from 2009.

The average age for couples to divorce is between 40 to 44 years old. The 2010 trend also shows that women are more likely to divorce at younger ages and men when they get older. With regards to the average duration of marriages in 2010 the statistics show that it remained steady at 11.4 years.

While no-one planning to get married or enter into a civil partnership wishes to think that things may not work out, nuptial agreements are becoming a popular way for individuals to protect their property and assets if the relationship does break down.

ARAG is now selling two new divorce insurance products – Pre-nuptial Legal Solutions and Divorce Legal Solutions – that are sold alongside nuptial agreements. These products provide a legal expenses insurance policy that starts from the date of a marriage or civil partnership and protects the policyholder against legal costs associated with matrimonial breakdown.

Both policies cover costs arising from a legal challenge to the nuptial agreement whilst Divorce Legal Solutions extends cover to include the cost of divorce proceedings.

Find out more about Pre-nuptial Legal Solutions and Divorce Legal Solutions from the ARAG website.

Fighting for access to justice

As a member of the Consumer Justice Alliance (CJA) we at ARAG were very interested in seeing the video that they have just produced and released on YouTube. Called ‘Fighting for access to justice’ it looks at how the CJA are campaigning against the Government’s proposals for changes to civil litigation as presented in the LASPO Bill.

More importantly victims of accidents and medical negligence are invited to discuss their experiences and how their lives have been transformed not only by their illnesses or injuries but how they managed to turn it around thanks to the compensation and support they received as a result of being able to claim through the current system.

As one victim of medical negligence describes in the film, “changing the funding regime will make it harder for people to have their claim properly investigated and also for the hospital to change the practices that allowed it to happen and deny them full compensation for the loss they have suffered.”

The risk of having to pay for legal fees should the decision go against you would have been too much of a barrier for the people speaking in the film and they all explain that this is not a risk that they could have taken.

Nigel Meurs-Raby, Chairman of the CJA concludes the film by saying, “These are real people who are real victims with injuries that are not their fault. We need to do everything that we can to make sure that this dreadful new legislation doesn’t end up on the statute book.”

Watch the video in full here: http://www.youtube.com/watch?v=gtvMdYOu3Ks&feature=related

ARAG responds to ruling on insurers’ use of non-panel solicitors

Following the High Court’s Judgment in the case of Brown-Quinn & Webster Dixon -v- Equity Syndicate Management, ARAG Legal Services has issued its reaction to the decision.

The Bristol-based legal expenses specialist warned that the court’s decision was not a positive one and, without any evidence to suggest that non-panel law firms offer higher standards of representation, the main beneficiary of the ruling would be the non-panel law firms themselves. The court’s decision could also result in higher legal expenses premiums.

ARAG’s Managing Director Tony Buss commented: “With no evidence to suggest non-panel firms deliver a heightened level of service to the policyholder, those firms may well be the only long-term beneficiaries from the Judgment. At a time when, the take-up of BTE is being encouraged, this cannot be a positive development overall.”

Many legal insurance providers will now consider their policy wordings and whether they are consistent with the judgment, especially where they have chosen to expressly limit the costs payable to those which their panel lawyers charge.

ARAG’s policies fully comply with the decision. In addition, legal insurance providers will need to be sure that their approach in practice complies with what their wordings actually say. It seems in this case that the defendants' approach was at odds with the policy wording and also perhaps the result of too ambitious an interpretation of The Insurance Companies (Legal Expenses Insurance) Regulations 1990.

Even with cases handled by its panel, ARAG does not take a "one size fits all" approach, and has arrangements for higher remuneration rates for more senior lawyers when circumstances demand it. This also extends to how we contract with non-panel solicitors, where again, we will, where appropriate, agree a higher rate, be that an aggregate hourly rate, or a variety of rates.

That is not to say that ARAG embrace the appointment of non-panel firms. Unless the complexities of the case warrant the appointment of a non-panel firm, we are confident that our policyholders receive at least as high a level of service from our panel firms as they would their chosen lawyer, but at a fraction of the cost. That cost, as the Judgment recognises, is reflected in the very modest premiums policyholders currently pay for before-the-event (BTE) legal insurance. The obvious danger therefore arising from this Judgment is that policyholders wanting to use their own solicitor will see their financial position strengthened when looking to insist on their own solicitor acting. The consequence of this is increased exposure to the insurer which is likely to be passed on to policyholders in the form of higher premiums.

A new addition to your wedding checklist, get divorce insurance

I find myself in a strange predicament at the moment as I am getting married next month, yet at work I am charged with marketing ARAG’s latest offering, divorce insurance. This is not something that I imagined adding to my ever growing checklist when I got engaged however it has definitely given me some food for thought!

Launched to the market on Monday 6 September, the two products – Pre-nuptial Legal Solutions and Divorce Legal Solutions – will be sold alongside nuptial agreements and provide the policyholder with a legal expenses insurance policy that starts from the date of a marriage or civil partnership. Both policies cover costs arising from a legal challenge to the nuptial agreement whilst Divorce Legal Solutions extends cover to include the cost of divorce proceedings.

The Government has perhaps unwittingly paved the way for the development of such products with its plans to restrict the provision of legal aid in most divorce cases. As pointed out in an article by the Daily Mail (November 2010) these changes, “mean anyone who wants to protect their share of the fallout from a broken marriage will have to pay for their own courtroom advice... The proposal raises the spectre of hundreds of thousands of husbands and wives taking out ‘before-the-event’ policies against the cost of divorce.”

Further to this the landmark case of £100m pound heiress Katrin Radmacher highlights the huge potential for an insurance policy that covers costs arising from a legal challenge to the nuptial agreement. In the case, Radmacher’s pre-nuptial agreement was upheld by the Supreme Court, reducing her ex-husband’s settlement from £5.8m to around £1m. Following this, the Law Commission is considering a statutory framework for pre-nuptial agreements.

It therefore seems likely that interest in divorce insurance will grow considerably in the coming years. This trend is backed by figures in the 2011 Matrimonial Survey by Grant Thornton where it shows that 58% of their respondents (family solicitors) reported that their level of pre-nuptial advisory work has increased [in comparison to 2010], and the Office for National Statistics Bulletin showing the number Civil Partnership dissolutions in the UK in 2010 increasing by 44%.

Add to this the precedence set in some European countries where there is already an established market for divorce insurance and the potential for development in the UK is clear to see.

Two law firms who draft relatively high numbers of nuptial agreements – Mishcon de Reya and Prolegal - have already made these products available to potential clients. The press coverage received so far, including a feature on Radio 4 show PM, has also on the whole been positive:

The Guardian: "Getting married? Top legal tips for couples-to-be…1. Have a prenuptial agreement.

The Economist: “With half of all marriages doomed to fail, even the moderately hard-headed may be interested in ways of mitigating the danger.”

Financial Times: “So, you’ve just got married, what do you do? A) Go on honeymoon, B) Celebrate with your family, or C) Take out divorce insurance.

If you answered C then, (somewhat surprisingly), you are not alone... while divorce insurance is unlikely to take off for the mass market any time soon, it could work for individuals who have already taken the time to craft a pre-or-post nuptial agreement.”

Financial News: “For the high net worth individual for whom a pre-nup just isn’t enough protection from the one they love, Mishcon de Reya is offering additional new armour for their clients’ personal fortunes: pre-nup insurance.”

Moneyhighstreet: “Savvy investment”

I will leave it to ARAG’s MD, Tony Buss to sum up, “While some may see the very idea of ‘divorce insurance’ as unromantic, the realities of modern life and the government’s legal aid and costs reforms will make it harder for ordinary people to access justice before the courts, meaning this is the right time to launch such a product.”

Find out more about the products: Pre-nuptial Legal Solutions Divorce Legal Solutions