John Mullin says we should be making the case for compulsory BTE cover

' My observation, and indeed that of others, (News, 3 August) referred to 'scare tactics' (or similar expressions) by the Legal Expenses Insurance Group (LEIG).

At Composite Legal Expenses we have long held the belief that the protection afforded by uninsured loss recovery (ULR) insurance is just one small part of a much bigger arena of essential consumer legal protection.

And, I would emphasise our credo is that all should have access to justice where genuine grievance or issues are at stake.

My opinion is that the view put forward by the LEIG does not form a cohesive argument against raising the threshold in the small claims courts. If the LEIG believes that legal expenses premiums would need to be doubled as a result of increasing the small claims limit, then one should look at the net ULR cost to providers rather than gross.

It is a fact that, for around a decade, for most motor insurance providers, income from ULR sales is an essential part of trading economics - 'risk free income'. Largely, those same providers gave up chasing customers' uninsured losses years ago favouring the ULR route - and now ULR sales penetration is considered to be 90% plus.

It is also true that, for the large part, ULR facilities are bought in at a nominal charge per capita and sold on to the consumer at anywhere between £10 and £20 per annum. Probably, there are some exceptions where the consumer price is less or, indeed, more.

So increasing the net premium, were it necessary, does not imply huge price increases with a resultant drop in take-up and, therefore, commissions for motor insurance providers.

Conversely, the number of households that have opted for full personal legal expenses insurance is dismally small. Yet with every stroke of the pen government regulation and legislation signal that a prudent move for individuals would be to buy the full cover.

If the energies of the market and its copious action groups could be funnelled into actively promoting the necessity or advisability for more comprehensive legal expenses cover, the net result would be an opportunity for providers to generate income and a safety-net for customers across a wider range of issues than just ULR.

The resultant increased volume of legal expenses insurance sales would reduce premiums as competitive pressures support those providers with low cost bases and a hunger for business, mirroring the price falls in ULR of a decade ago.

So, rather than bemoaning the lack of income for insurance brokers who control, nowadays, a steadily decreasing proportion of the motor insurance market, many brokers should see the prospect of increased small claims limits as an opportunity.

Lawyers, who may argue such an increase in limits could circumscribe their very existence, could reflect that growth in legal expenses insurance covering the whole gamut of personal needs would increase fee income.

One party silent in this debate are liability insurers. They talk frequently about 'compensation culture', ATE premiums and claims funding, all reflecting their desires to reduce the amount of legal fees within settled claims.

However, they still have to advise the broking fraternity and their policyholders on the effect on premiums, given the estimates the insured (directly or with assistance from legal expenses insurance) will be responsible for funding 90% plus of all legal bills regardless of fault.

Would we see an immediate reduction in premiums, or would operating ratios be maintained despite these savings?

It has always been my great hope that, despite the many political hurdles, governments would be prepared to bite the bullet and make at least before-the-event

(BTE) personal injury (motor and non-motor) legal expenses insurance a mandatory purchase. The cost to the consumer would be of no significance even in the most difficult economic climate.

We (claimant legal expenses providers, insurance brokers, authorised insurers and the legal profession) should be focusing our energies and resources on this kind of constructive lobbying of government.

Indeed, the defendant interests and plaintiff interests become common here and the consumer, a customer of both parties, for example, insured for car and insured for rights, is also a winner. This proposal does not have to be seen as a tax.

So, let us have a fully represented debate with cogent argument for and against and make some rational decisions, bearing in mind the interests of the public rather than imagined lost income streams. IT

' John Mullin is managing director of Composite Legal Expenses

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