Legal expenses insurance is a growth opportunity for brokers surveyed by MSL at the 2017 Insurance Age Broker Expo, but too much regulation risks reducing the number of brokers wanting to distribute this form of cover, putting a spanner in the government’s plans to broaden the reach of legal expenses insurance following reforms to personal injury.
Feedback was generally optimistic. 71% of brokers expect to write more premiums in 2018, while a further 14% expect to write the same level.
According to MSL’s Ben Clarke, national sales manager, the number one challenge for brokers by far was regulation. Brexit uncertainty and a softening market were the other challenges cited.
And although there have been high profile market exits, especially from non-domiciled Elite, brokers still believe there is ample choice of provider, with 78% saying they was sufficient choice.
Nearly 60% said that legal expenses insurance was a significant or useful source of revenue for their business. Ben said: “This suggests the market has plenty of headroom for growth, more so because legal reforms will mean demand for legal expenses insurance will increase as it becomes an essential cover for customers, so generating additional revenue for brokers.”
“It’s good to know that brokers feel there is enough competition, but regulation is a pervasive issue, and worries about the weight of regulation may well act as a barrier to entry for brokers thinking of writing legal expenses.”
“Our survey suggests that regulators need to ensure that increased future demand for legal expenses insurance, following legal reforms, including those in the yet-to-be published Civil Liability Bill, is not artificially constrained by over-burdensome regulation, which will put off brokers offering this important cover.
The government argues that legal expenses insurance will fill the gap for customers suffering minor injuries, whose rights to legal advice will be removed by the personal injury reforms, so it needs to encourage the FCA to make sure this product is readily available to people who need it.”