The LSB is calling on the insurance industry and legal service providers to support consumers by raising awareness of legal expenses insurance, incentivise better quality products and build trust through greater transparency. Mystery shopper research has shown that consumers are not getting the information they need from insurance comparison websites, and the insurance sector need to make legal expenses insurance more accessible.
The research focused on insurance products available through price comparison websites. Higher priced policies would normally be expected to offer consumers more than cheaper ones. Yet, based on Defaqto star ratings, the LSB’s mystery shopping exercise found no correlation between the price of the legal expenses cover and the quality of these products.
The LSB sector-wide strategy, reshaping legal services, sets a goal to see most households with a legal expenses insurance policy in the next ten years, enabling them to access a wide range of legal services free at the point of need.
Collaboration is crucial to making real change across the sector, and to make legal insurance products understood and trusted by consumers. The LSB has identified three ‘key asks’ from the insurance sector and legal service providers, including comparison websites, to help achieve this goal.
The key asks are:
- Raise public awareness and understanding of legal expenses insurance
- Incentivise insurers to improve the coverage and quality on products
- Build trust through greater transparency and improve satisfaction with products
LSB research suggests many people expect legal expenses insurance to be more limited and expensive that it actually is, and this is limiting the protection it could offer consumers.An estimated 3.6 million people have an unmet legal need involving a dispute each year, and few consumers can meet unexpected legal costs from disposable income.
Since legal expenses cover is either a standard feature of home insurance policies or sold as an add-on,consumers do not freely choose their legal expenses policy. This means they are badly placed to drive improvements in quality through their purchasing behaviour.
The Financial Conduct Authority estimates 15 million adults may have legal expenses insurance, but many people may be unaware they exist, or unsure of what they cover. LSB survey data indicates that as few as 250,000 people a year use insurance to fund legal work. This suggests that many consumers are not using from the insurance products they own.
Steve Brooker, Head, Policy Development and Research said:
“Consumers need better information to support them exercise choice and purchase good quality legal expenses insurance suitable for their needs.”
“The insurance industry has a role to play in better promoting legal expenses insurance and to build stronger confidence in these products. Legal expenses insurance seems to be widely owned but little used, meaning that it’s not fulfilling its potential to close the access to justice gap.”