The boss of ARAG has called for support in spreading the message of how legal expenses insurance (LEI) can support access to justice in the wake of its acquisition of competitor DAS.
Tony Buss said awareness of the benefits of LEI was slowly increasing but lagged far behind several European countries, and ARAG was looking at other routes to market.
Both the government and the Legal Services Board have identified LEI as a key product in providing access to justice.
ARAG’s deal for DAS, announced last summer, has now completed, creating a company with around 850 staff and gross written premium of around £190m. The UK is now ARAG’s largest operation outside of its German base.
Mr Buss leads it with Tony Coram, previously chief executive of DAS UK, becoming chief operating officer. The executive management board is made up of four representatives from ARAG and three from DAS.
Mr Buss stressed that no redundancies were planned – growth would come through combining the two businesses’ operations into a ‘best of class’ offering rather than through costs cutting.
“It will allow us to share knowledge and skills, and to bring new ideas, products, and services to our customers, including further digitalisation of our offering,” he said.
This included having a much bigger data set, enabling ARAG to have a stronger grip on how claims are likely to pan out. The DAS brand will disappear later in the year.
“We will be delivering more value,” he continued. “In insurance, people usually measure premium against the cost of claims. But we measure compensation against premium. For example, with after-the-event (ATE) insurance, our customers receive 33 times more compensation than the premium we receive. No other insurance product produces such a return on what you pay.”
Mr Buss confirmed that DAS Law, its alternative business structure, would in time grow as ARAG put cases through it as well.
The LEI market remained competitive despite the two big names in the market coming together, he said, and it was of a good size – around 10m businesses and people have LEI bundled in with other insurance, mainly commercial, motor and home policies.
However, how many knew about and used it was another question, he conceded. But use was “going up and up and up – awareness is building”.
He agreed that LEI had a role in supporting access to justice “and it can do more but we need some support in spreading the message”.
This was why ARAG was looking to “reach people beyond the old-fashioned way of buying insurance” and distribute LEI through other sources, such as employers and developing ATE.
Countries like Germany, Austria and Holland sold LEI in different ways – and had done so since the Second World War, whereas it is a more recent invention in the UK – and had a much higher profile as a result.
In general, on the continent, he explained, consumers paid substantially more for LEI than in the UK “because they know about it and make full use of it every time”.
Mr Buss described ‘self-insurance’ as a competitor for LEI, saying the question for consumers was ‘What would it cost to do it yourself?’
The Ministry of Justice has seen LEI as helping claimants with low-value injuries using the Official Injury Claim portal. Mr Buss said that, as he had predicted, the new regime had increased the cost of LEI because the cost of claims was going up with no recovery of legal fees.
In its 10-year strategy for the sector, published in 2021, the Legal Services Board said one ambition for 2031 was that “most households have an LEI policy or other mechanisms enabling them to access a wide range of legal services free at the point of need”.
In a report on LEI last year, the Association of Consumer Support Organisations said the government should run “awareness programmes” to educate the public about its benefits. It said LEI provided “more people with affordable access to justice than any other mechanism in our society”.