An important driver for evolution in the legal expenses insurance market is, undoubtedly, going to be the Regulator’s focus on fair value.
The FCA published its value measures table for 2023, a few months back. The data showed that personal or home before the event (BTE) legal expenses insurance has a claims frequency of just 0.30% (the same level as in 2022), and a claims acceptance rate of just over 56%. Considering that add-on Guaranteed Asset Protection (GAP) insurance, which saw action from the Regulator earlier in the year, had a frequency of 0.50% in the table, could we see the FCA fair value spotlight turning toward BTE?
Claims frequency and low levels of utilisation, point to the need for providers to ensure they are developing and distributing products that are fit for purpose, meeting a real need and that stand up to the scrutiny of the customer and Regulator.
So, what might evolution in the LEI market look like?
Are customer expectations being met and do they understand or recognise the value of LEI cover? These create real challenges for providers. If expectations are not being met and the cover is a ‘mystery’, how can providers ensure they have products fit for purpose?
Is it time to move beyond the focus on litigious issues, into more day-to-day areas of support such as estate planning, matrimonial matters, and conveyancing?
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