Celebrating diversity

Fairness is one of the principles that underpins all ARAG activities, whether in the UK or worldwide. Bringing together the 14 nationalities of staff in Bristol helps share and explore diversities of culture and, by embracing differences, encourages us all to make better use of our potential.

So, last year we marked Bastille Day on 14 July on behalf of the French. This year, it was the Greek National Day on 25 March where we celebrated freedom.
Landmarks like this focus our thoughts on core objectives in life, and the fun part – dressing in national colours, flying the appropriate flag and enjoying traditional food – are a good way to make sure we remember them. Incidentally, most Greeks eat salt cod with garlic potatoes for lunch on their National Day and, for the record, our Greek members of staff are In-House Counsel, Hector Stamboulieh and Software Development Manager, Kostas Tsarouchis.

The lengthy war for Greek independence, starting in 1821, was by no means the first uprising against four centuries of rule from the Ottoman empire but this time it was successful. By 1832 a treaty was agreed. It is not the only date regarded as a national day in Greece: ‘Ochi’ Day on 28 October commemorates rejection – ‘No’ – of an ultimatum delivered by the Italian ambassador to Greek Prime Minister Metaxas in 1940, demanding that Italian troops be allowed into Greece.

Best Employer

We pride ourselves on being a quality insurer. But what defines quality? Sure, we know our products are some of the best in the market, and our prices offer great value for money.  It’s the people of ARAG that deliver the service which our customers have come to expect and we believe it’s this that separates us from the rest; it’s this that makes us a quality business.

Quality service comes from those who are motivated, happy and engaged. Best Companies is the gold standard when attempting to gauge the engagement of your people; it’s the benchmark that underpins the Times Top 100 Companies to Work For.

We’re proud, for the second year running, to have been awarded outstanding employer status (two-star).  We therefore know that we’re doing things right in terms of Leadership, Teamwork, Personal Growth and Giving Something Back to name a few. Being outstanding reaffirms our belief that we’re on the right track.

But we want to do more; our drive makes us look for continuous improvement. We have aspirations to be a three-star company within two years and to compete against those in the Times Top 100 list.  We want to have engaged, motivated, inspired, happy, learning people who can not only deliver against our customers’ expectations, but go beyond them. 

Consultation on fixed costs in clinical negligence claims

Yet another consultation is underway, which could see the scales of justice tipped further towards defendants and their insurers and away from vulnerable people injured by medical malpractice.

Most people would agree that there is  little wrong with the concept of fixed costs, in theory.
The latest consultation to address them, Introducing Fixed Recoverable Costs in Lower Value Clinical Negligence Claims, is being conducted by the Department of Health.

Fixed costs would provide certainty to all parties and should preserve the principle that the losing
party pays while ensuring that the decision to settle or fight is made from an informed position, without the uncertainty of a large unquantified legal bill.

A predictable scheme of fixed costs might also help both the BTE and ATE insurance markets to provide simple, affordable products for solicitors and the public to purchase.
From the government’s point of view, by far and away the single largest payer of legal costs and damages in such cases, fixing the state’s costs’ liability would be very attractive. It should also encourage efficiency on the part of those bringing the claims.
However, there are inevitably issues that will have to be resolved, such as the level at which costs are initially set, how often they will be reviewed and how any adjustments, such as inflation, will be calculated.

Where fixed costs have already been established, such as RTA and portal claims, the prescribed amounts are not subject to periodic review, so their value is being eroded by inflation and market changes. This will reduce the number and suitability of solicitors willing to take on the work.

Imagine how liability insurers would react to being told premiums would also have to remain static, to match the lack of review for fixed costs.
Defendants and their insurers are invariably in a stronger financial position than claimants, and often use this to their advantage. They are not limited by fixed fees, as their solicitors are paid by their insurers, regardless of success. In contrast, claimants cannot pay more than the fixed amount unless the case is won, when a success fee (up to 25% of damages) can be added.

However, solicitors can be reluctant to take a share of the claimant’s damages, so often forego this potential entitlement. Defendants know that the claimant’s solicitor can only do so much work under a fixed fee scheme, or face making a loss and risking the firm’s future.  In some cases, such as low-value injury claims, defendants are known to exploit this advantage by forcing claimant solicitors to spend additional time on a case by denying liability, not responding promptly, raising unnecessary technical points, intimating fraud without actual allegation or providing too little or too much disclosure.

The fixed costs recoverable for experts’ fees, such as medical reports, are also typically low, creating further disparity. Defendant insurers can use their buying power and deeper pockets to instruct more experienced, better qualified experts. Individual claimants must rely on cheaper, more junior experts, putting them at a further disadvantage. The same will be true of legal expertise as claimant firms may be forced to use more junior fee earners, if rates are too low to cover the cost of experienced solicitors. This goes to the very heart of access to justice. Unless laws designed to protect and compensate innocent victims can be applied and easily accessed in the courts, then we might question whether there is any point in having such laws at all.

What’s next in ATE?

Commercial ATE gets underwriting boost.
A dedicated new underwriting team, a clear emphasis on service standards and a host of fresh ideas to assist major legal firms in adjusting to a changing yet well-established market sector, ARAG is well placed to challenge in the commercial ATE sector.

With a clear focus on new business opportunities in the range of £100,000 to £500,000 indemnity limits. ARAG has committed the resources to deliver a first class service in this competitive marketplace. Underpinning the push for growth is the development of products under the Recourse umbrella. As always, the underwriting team is happy to discuss bespoke options to tailor cover to the needs of both the legal practice and to the specific type of case. The objective is to make ARAG a first, and automatic, choice of insurer partner.

Increasing activities in this sector is part of the company’s plan to accelerate its GWP in this area of the market. With further proposed legislation changes on the horizon, legal practices are similarly taking a new look at how they will affect their businesses over the coming years. The ARAG team is poised to respond. There are currently two distinct core policy types: Recourse Complete is the well-known policy for personal injury claims – accidents at work, slips & trips, clinical negligence, industrial diseases and RTAs. It is Recourse Options, designed for non-injury cases such as commercial and personal contract disputes, that is causing the latest interest. This also covers professional negligence, wills & probate, as well as insolvency claims.

Housing disrepair
Whilst some firms may not fully diversify into commercial claims, they are likely to be looking at the areas such as housing disrepair. Since the boom in buy-to-let investment, there has been a startling increase in the number of ‘rogue’ landlords who are not looking after either their properties or their tenants. Having seen the shortage of rental properties and very little enforcement of regulatory requirements, these landlords have been ignoring ‘due care’ and putting tenants into substandard accommodation, then failing to carry out even the most basic repairs such as dealing with damp. Often, it will be tenants housed by local councils; people who have very little in the way of funds or legal expertise who are left  to pursue claims without help. There has been a substantial amount of litigation already, and it is growing all the time. 

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.