Survey: The future of motor legal expenses - Beyond the add-on

Coral Insurance, a new specialist legal expenses insurance (LEI) provider, sponsored a broker market survey earlier this year, in partnership with Insurance Age. 165 brokers from across the UK told us what they thought about LEI.

There are very diverse views on how demand for LEI will shift post-CLA reforms. As the full report on the preceding pages shows, just over half thought demand would remain the same or reduce, while 29% thought demand would increase by anything between 1-20%, and nearly 10% thought demand would grow by more than 20%.

The future direction of travel for LEI demand remains to be seen, especially now the launch of the small claims portal has been pushed back by at least 12 months.

Whenever the portal launches, the market needs a new range of modern LEI propositions which deliver real value to customers; customers who are largely ignorant about LEI – a factor not helped by some brokers having no more than a very basic knowledge of the product themselves.

Tomorrow’s world
It’s not easy to develop a product that is ready to meet tomorrow’s challenges today but, as a market, we have the opportunity to ensure that consumers do not get left behind when they face legal issues, for example, needing a lawyer following an injury from a motor accident.

Old solutions aren’t likely to fix new problems and, in truth, the current range of LEI products are old solutions. It’s hard to pinpoint any real innovation in the last 20 years (and I’m not counting an ever-longer list of perils which often offer perceived rather than real value to customers).

Industry inertia means customers stay uninformed. Product features bear little relation to what customers actually need, and the fragmented supply chain makes for a mediocre claims experience at best. Exclusions are rife, so value is perceived as minimal. Often, customers get stuck into unnecessary litigation that increases claims and indemnity costs.

It’s not easy to develop a product that is ready to meet tomorrow’s challenges today but, as a market, we have the opportunity to ensure that consumers do not get left behind when they face legal issues

Insurance isn’t perceived to be at the ‘bleeding edge’ of innovation in technology or customer experience. Rather, insurance is often a ‘fast follower.’

In personal lines there’s now a vibrant community of tech disruptors with a mission to put customer experience front and centre in sales and claims. LEI has yet to join the party. We need to ask why that’s the case.

To me, it seems that LEI suffers from a deep perception bias; while LEI often means that customers will be able to benefit from guaranteed access to justice, it remains just a simple add-on.

It’s something of a paradox that affordable access to justice, at a time when the citizen’s rights to justice are being hollowed out by cuts and reforms, is reduced to an add-on somewhere towards the back end of the customer sales journey. Our UK experience is very different to that of Germany, for example, where the nature and scope of legal insurance is well understood by its citizens, and used accordingly.

It may be that the value of LEI is often buried in the distribution and purchase journeys because we providers no longer have sufficient belief in the product. At Coral, we do have belief, and while you won’t see overnight change, our first step is to bring refreshed motor and home legal expenses products to the market that are genuinely customer-led.

Moving forward
The market has a shared responsibility to move LEI forwards, in every sense. We need to invest the time needed to understand the biggest problems our customers want solving. What should the solutions be? And where should they show up in the insurance journey? After all, 70% of brokers said that lack of consumer knowledge was the biggest obstacle to customer take up. Whose fault is that?

I’m excited about re-writing the LEI rulebook, and we’re appealing to like-minded brokers to work with us on proposition developments. Getting this sorted will move LEI beyond an insurance afterthought to become a valuable tool for customers to navigate their way through the civil justice system.