Insurance industry facing challenges to improve understanding of legal expenses insurance

A survey of 250 UK insurance brokers by DAS UK Group, the UK’s leading legal expenses insurer, has found that the insurance industry is still faced with challenges when it comes to the understanding and selling of legal expenses insurance.

The latest DAS quarterly ‘Market Barometer’ found that, while 98% of brokers thought that there was a demand for such products, 45% said that the main barrier to the take up of legal expenses insurance was simply a lack of customer understanding as to what the products can offer. The next barrier was the current economic climate which was cited by 20% of brokers.

Nevertheless, the report also found that the barriers to the take up legal expenses insurance can be difficult to pinpoint with 25% of brokers unable to identify a specific barrier to utilisation of the product. Furthermore, the report also shows that the legal expenses products themselves are sound with just 3% of brokers citing poor policies as a barrier to take up, 2% citing a lack of demand, 2% blaming the small print, and just 1% asserting that the products were too generic.

In terms of the positive aspects of legal expenses insurance, appointment of a lawyer (18% of brokers); employee disputes cover (18%); a 24/7 helpline (15%); and limit of indemnity (16%) were all mentioned as key selling points.

The survey also found that more than 50% of brokers believe that commercial legal risks will grow in the next few years, in stark contrast to SMEs, of whom just 5% believe that commercial legal risks will rise [source: DAS Market Barometer: SMEs, June 2017].

This gap between brokers’ perception of legal issues and that of their SME clients demonstrates that the legal expenses insurance industry needs to be more effective in communicating the benefits of such cover in what are increasingly litigious times.

Darren Weekes, Head of Broker, DAS UK Group, said: “This research indicates that there is essentially nothing wrong with the legal expenses insurance product – there is a need for this product and its price is reasonable. What hinders take-up is a lack of understanding about what it actually covers. We will continue to work hard with brokers to support raising awareness of legal expenses insurance.

“Brokers are a vitally important partner for legal expenses insurance providers and are instrumental in advising customers on the products. Based on the responses given, there is commercial opportunity here if that customer understanding challenge is overcome and end user education is improved. We will continue to work hard with brokers to support raising awareness of legal expenses insurance.”