Well-known legal expenses insurer Abbey Protection is to launch a three-pronged attack on the SME market once its application to become an alternative business structure (ABS) has been approved, it has revealed.
The AIM-listed company – which provides legal and taxation related professional fees insurance products and services to SMEs – has expressed frustration at the speed with which the Solicitors Regulation Authority is processing applications.
Publishing its 2011 accounts, Abbey announced a 5% increase in profits to £10m on the back of a 4% rise in income to £36m. The legal division produced £2.6m of the profit (up 23%) and revenues of £10.3m. Underpinning this was renewal income from its 150 affinity scheme clients, which held up at 98%, and a 50% increase in new business sales. Fee income from employment-related services grew 9% to £2.4m.
Chief executive Colin Davison said Abbey has the “financial strength” to take advantage of the opportunities presented by ABSs, but that they were “disappointed” by the delay in licensing.
“Our application is now with the Solicitors Regulatory Authority and we are hopeful that we will be licensed shortly,” he continued. “We will then be able to execute our plans to expand the range of legal services we offer.”
Group managing director Chris Ward explained to Legal Futuresthat the company al
ready employs around 70 solicitors and barristers in its legal advice call centre, who also provide insured employment tribunal services. Becoming an ABS will allow it to scale up this resource to provide a wider range of commercial litigation services beyond those covered by insurance.
The plan is for Abbey Legal Services (ALS) – which provides the legal help and currently deals with 290,000 calls a year – essentially to become another of the company’s panel firms, to which legal expenses insurance policyholders might be directed. Mr Ward emphasised that ALS would just be one option and that other law firms will remain on the panel.
Further, ALS would seek to offer its wider service range through some of the affinity clients, the biggest of which is the Federation of Small Businesses. The final arm of the ABS plan is an equity investment in an identified but unnamed law firm, which Mr Ward said would give ALS access to expertise in areas of practice which it does not initially want to resource in-house.
Abbey also provides after-the-event insurance, in particular the Law Society’s Accident Line scheme. The annual report said: “The profit contribution from the after-the-event division reduced slightly, notwithstanding an increase in underlying policy sales of both its Accident Line and commercial ATE products.
“We have taken the decision to strengthen the provisions for the run-off of these policies with all the uncertainty surrounding their future following the Jackson review although the full impact of this has been delayed until 2013.”
The accounts mixes the ATE division’s income with that from Abbey’s human resources consultancy and insurance run-off services. Collectively they brought in just under £2m.