Cards on the table, one annoyance that has constantly grated with me in more than fifteen years working in the Legal Expenses Insurance (LEI) sector is the term “LOW COST ADD-ON” – Arghh!
When I’m shopping I like to think I’ve got a bargain as much as the next man (or woman), however, there is a significant difference between buying something which is a good deal (value for money), to buying something which is cheap. Unfortunately I worry that LEI in recent years has started to fall into the latter category.
So how can BTE LEI re-invent itself as a real valuable solution for consumers?
Firstly, you need to look at the way LEI cover is sold; aggregators have taken the personal lines market by storm, with many insurers and brokers now providing motor and home insurance via this channel, however, the aggregators have set their stall out to guaranteeing customers get the cheapest quote (once again there’s that word cheap!), as such, it is of no coincidence that the take up of LEI has taken a hit as customers:
1) Don’t opt for any add-ons as they truly want the cheapest or
2) Find the whole exercise of trying to understand what LEI is or how it benefits them just too difficult (the amount of information provided about LEI at point of sale from an aggregator site is very limited).
Now it’s understandable why those trading via aggregators choose not to spend too much time focusing on the features and benefits of LEI, as their driver is to ensure they sell the core insurance offering, whether this is Motor, Home or Travel; so why can’t LEI be sold as a valued solution in its own right?
I’m afraid Legal Expenses Insurance has gone into something of a downward spiral in terms of the net price a distributor is prepared to pay, often seeing LEI as a ‘hygiene factor’ by way of keeping up with their competitors. Unfortunately, the only way to actively compete on price is often to the detriment to the customer, with more conditions and exclusions having to be introduced to frankly make it difficult for the customer to bring a claim under the policy. Thankfully this is something the FCA are seriously looking into as they address the issue of policy construction, challenging insurers and distributors and holding them to account as to how policies have been designed whilst asking the question ‘why is this good for the customer’?
Secondly, is product coverage and service delivery, as LEI can be a fairly complex product, especially Family LEI where there are numerous ‘heads of cover.’ Unfortunately the LEI cover you would have bought with your home insurance in 1999 is pretty much exactly the same today.
Customers need to be able to visualise the benefits that LEI can provide them, and there should be no barriers to the customer making a claim. Although LEI can provide so much more than just the funding for specific eventualities such as wider accessible legal services capable of delivering cost effective legal solutions that the customer may have not previously considered.
The manner in which the customer is able to interact is also vitally important, especially as customers are changing the way they deal with insurers and banks. A 2014 study reported that customers contact habits show that they engage with on average with 6.2 different contact channels, from face to face, telephone, mobile app, website, social media and post, compared to 4.3 in 2012. This choice of engagement has led to increases in the number of people using alternative remote solutions to telephone, such as mobile apps (7% to 23%), web chat (1% to 11%) and social media (3% to 8%).
However, whilst the research showed an increase in customers having a huge appetite for new technologies to undertake simple, self-service transactions that make companies easier to do business with, they still want the human touch of a traditional service, and this includes dealing with named individuals capable of making decisions. This shows that customers are not substituting one channel for another. Instead they are combining traditional channels with digital ones to achieve the best result. As the old saying goes, one shoe doesn’t fit all!
At ALP we’ve designed our solutions around the fact;
1. Customers need help to understand their problem and the potential legal service solutions available because if not there is no value
2. Customers want to engage with the service on their terms using all available technology and with human interaction where necessary
3. Customers want the experience to be of positive value – even when their need might not be covered for funding
If we stop seeing the product as cheap or low value we might have a chance of convincing the public of the benefits.
Author: Steve Rowley
Business Development Manager