Here today, gone tomorrow

Following last month’s news of the collapse of CBL Insurance and the subsequent failure of Denmark’s Alpha Insurance, Head of Sales Andy Talbot, considers where the next legal expenses underwriting failure may occur.

In 2016, it was AU Insurance Services. Last summer, it was Elite Insurance Company. Already in 2018, New Zealand’s CBL Insurance Limited has collapsed leaving Alpha Insurance A/S in solvent liquidation and run-off.

Often, it seems, these failures impacting the legal expenses sector get associated with the ATE market, somehow remote from the majority of brokers. But most legal expenses underwriters, wherever they are based, will have feet in both ATE and BTE camps.

Alpha is a case in point, having underwritten numerous motor legal protection and other policies for brokers around the country, as well as some ATE business.

The precise causes and circumstances of these failures (and the several others that have occurred in between them) may be very different, but they have all left brokers, other intermediaries and their clients in the lurch.

In most cases, clients are unlikely to be impacted if a change of underwriter is forced on their insurance provider. Some consolation for brokers who have to go back to the market, find a new underwriter or product and undertake all the subsequent work that such failures inevitably trigger. 

What is troubling is the frequency with which such failures seem to be occurring.

The legal expenses insurance market has not been an easy one in recent years. Increased regulation, LASPO, numerous other legislative changes and even the succession of IPT rate increases have all put pressure on smaller LEI providers.

Some underwriters have also been more vulnerable to the impact of continued uncertainty over EEA passporting rules, resulting from the Brexit vote, and there are likely to be more legislative changes to come. Proposals to change the way “whiplash” claims are handled and raise small claims court limits could seriously undermine the business models of some LEI providers and trouble their underwriters.

Brokers have good reason to be cautious. Alpha Insurance is only the latest underwriter to exit the legal expenses market. It is highly unlikely to be the last.

How and when the next legal expenses underwriter will leave the market is inevitably hard to predict, but brokers owe it to themselves at least, to minimise the risk of finding themselves in a similar situation over the coming months.

Very few law firms will have the knowledge of insurance markets that most brokers do, so it may be hard for them to understand and calculate the risk. Brokers, on the other hand, should be much more adept at asking the right sort of questions, not just of their immediate provider but the ultimate underwriter too.

Who is this policy underwritten by? Where are they based? Who regulates them and what sort of scrutiny do they come under? Are they independently rated by a credible agency? How much experience do they have writing this sort of business?

Thankfully, it seems that Alpha’s departure and run-off will, like Elite’s before it, be orderly. The underwriter appears solvent and seems capable of meeting its obligations.

Next time, we may not be so lucky.

Now is the winter of our… actually quite contented, thank you very much.

As anyone in the insurance industry knows, claims service can be the hardest thing to get right but great service can often go unappreciated. Winters are inevitably tricky for home emergency claims, which come in waves on the back of bad weather, leaving customers distressed and anxious. So, we’ve been particularly pleased with some of the positive feedback our claims handlers have been getting, as winter arrives.

“Lovely”, “Thrilled” and “Fantastic” are not words often used in the insurance claims process, but all are among the many plaudits offered by ARAG Home Emergency policyholders as we helped them through some of the stressful events that the recent storms brought with them.   

“A lot of our Home Emergency business is in the High Net Worth sector,” comments Head of Sales, Andy Talbot “so, customer expectations are understandably high. But that makes feedback like this all the more gratifying.”

It’s no secret that the key to delivering any service is setting clear expectations and meeting or surpassing them. Customers are generally understanding, even at the worst of times, but they need to feel that someone has a plan and the expertise to put things right, as quickly as possible.

“We don’t try to pretend that we never fall short of our own, very high standards and there are always surprises that old properties and a British winter can throw at you,” continues Andy, “But we’re the first to put our hands up if something doesn’t go according to plan, and the claims teams are brilliant at keeping customers informed and helping them through what are always really stressful times.”

“Quality of service has always been one of the key things that ARAG has differentiated on. So, we really have to deliver on that. As we head into another winter, I’m really pleased that we’re living up to the high standards that partners and policyholders have come to expect of us.”

The RAG - issue 15 - May 2017

It's this time of year again - when our bi-annual news bulletin is out ! 

You can flick through its pages and zoom in to read all our articles in our interactive flick book below.

Also, you can download it here : The RAG, Issue 15 - May 2017

At ARAG, clear and concise messaging at the point of sale takes priority

The FCA's concern regarding the sale of add-on products and how customer behaviours at the point of sale can be affected by the method of sale is well documented. Home emergency was one of the products selected by the FCA for inclusion in its Market Study of add-on products and we have concerns that generally speaking Home emergency assistance products are not always correctly understood by consumers. Managing expectations can be difficult.

Although the proportion of complaints reported to ARAG is very much below the market average, we strive to do better. Every single expression of customer dissatisfaction we receive whether justified or not, is an opportunity to learn more about our products. 

Some of the complaints we receive about Home emergency arise from customers reporting a problem that is not actually a "Home emergency". They have a fault which may be inconvenient but it doesn't cause damage or compromise the safety or security of their home. 
We can always help by making arrangements for an approved contractor from our networks to attend the insured's home, however contractor's costs will not be covered under such circumstances.

We value the assistance we receive from our brokers and business partners to minimise misunderstandings that can lead to disappointment for customers if their policy does not perform as envisaged. We don't need to convince you that messaging at the point of sale is key to avoiding customer expectation gaps. You can down-load suggested customer demands and needs statements for all of our products from our new-look website by clicking through the "BTE Products" tab. The statement for Home emergency is longer than for most other products and probably longer than we would like it to be however it has been drafted in consultation with our Customer Relations Team with the aim of getting across the information that we consider critical to consumers. We hope you find this helpful.