Coral Insurance, the new legal expenses insurance (LEI) solutions business launched by BHL UK, who’s portfolio includes Minster Law and Compare the Market, aims to make legal expenses insurance a ‘valued, must have’ for UK consumers. Coral will work closely with sister company Minster Law, who specialise in motor and family legal services, and according to Director of LEI, Will Price, aims to square the circle of delivering improved performance in claims cost management whilst making sure that customers, “benefit from greater value and use of the product if they have a legal concern.”
Price said, “The FCA has made clear that ancillary insurance products which are sold but not used aren’t fit for purpose, and LEI can fall into that trap. It’s wrong-headed to make and sell products that are under-utilised and ignore the needs of so many customers.”
“Government’s civil justice reforms, cuts to legal aid and inflating claims costs have created the need for big changes in the LEI market but providers don’t seem to be willing or able to step up to the challenge, until now.”
He explained that Coral will be a wholesale provider of LEI to insurers, MGAs and brokers , backed by A-rated capacity from Allianz alongside a panel of other supporting capacity providers.
Price believes Coral’s close alignment with Minster Law will be a point of difference for the business, “Following Government reforms to personal injury regulation, there’s obvious opportunity in motor where Minster provide a compelling capability in high-volume, low-cost RTA PI claims processing but it’s currently a commoditised product – that needs to change. We also see significant potential in helping individuals and their families with what we refer to as ‘personal legal protection’ where there is an untapped opportunity for better tailoring of the product to meet the needs of a growing number of under-served customer segments and to rethink the entire legal services model.”
“Working with Minster, we will be more collaborative than the traditional LEI model in finding ways to better respond to the needs of customers. We’re challenging the practise, deliberate or otherwise, of law firms to drive customer down the litigation route. This has a huge impact on claims costs and loss-ratio performance and ultimately takes customers down a path the majority would prefer to avoid.”
RESOLUTION DOESN’T HAVE TO MEAN COURT
He went on, “Coral and Minster Law are committed to a ‘litigation as a last resort’ service model, so we are working together to provide enhanced, upfront legal support which aims to resolve legal disputes, championing greater use of dispute resolution and mediation, and helping the customer better understand their options and routes to resolution ahead of any litigation”.
“When you put more of a customer lens over how you connect LEI and the legal services it funds, it drives a very different way of thinking about how it can be designed, promoted, utilised and delivered”.
“Greater, more cost-effective utilisation of the product will create better customer outcomes and greater value for all parties. This approach is more in tune with FCA thinking about ancillary products and will also lead to improved claims costs management for our insurers.”
“We think the UK LEI market is at a crossroads in terms of its evolution. For too many years it has played an almost peripheral role – largely as a result of vested interests, an almost total absence of fresh-thinking and a lack of desire to challenge the status-quo. Society has changed and LEI fundamentally needs to evolve to keep pace with that change.”
LEGAL EXPENSES FOR THE 21ST CENTURY
Price said: “To realise the true potential of LEI in the UK, we need to start thinking about it in the same way as some of our European counterparts, where citizens are more informed and knowledgeable about the benefits of LEI and it is a socially beneficial product that truly helps them in the event of an injustice, whether on the road or at home, or in the workplace.”
An estimated 25 million UK households currently have LEI cover. Around six in 10 consumers already pay for this insurance in some form and the UK legal expenses insurance market is currently worth some £447m. A policy typically costs between £13 and £24 a year and is usually added to motor or home insurance product or bundled as part of a wider customer value proposition.
Price said: “We’re looking to work with forward-thinking partners who share our vision for the LEI sector and we’re aiming to capture 15% of the market within the next 3 years. Our products will be distributed via brokers, insurers and MGAs with legal services provided by our sister company Minster Law.”
“With significant backing from Allianz, RAC and FLI, we are confident that by connecting insurance and legal services we can make real inroads into a market that has been almost devoid of innovation for the last twenty years.”
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