I refer to the news in last week's Insurance Times that a former Link insurance manager had obtained a substantial settlement from her former employers on the basis of sex discrimination.
It was quite disturbing to read that an organisation like Link should describe its equal opportunities policy as “unwritten”. In this day and age, a written equal opportunities policy is every bit as important as a written disciplinary procedure. Employment dispute legislation is one of the fastest growth areas in litigation; no company can afford to be without the appropriate formal procedures, nor to fail to follow them in all situations.
The Link case shows exactly the kind of problems failing to address this issue can cause.
Furthermore, I noticed that Link chairman Andrew Fleming made reference to the “big legal expense”. Because the employer has
no opportunity to recover costs at an industrial tribunal, this is probably nearly as big an issue for most companies as the actual settlement figure itself.
Therefore, it seems slightly ironic that, as an industry, we find it relatively easy to sell uninsured loss recovery policies with a private car policy. We find it reasonably easy to sell a domestic legal expenses policy with household insurance. Yet we struggle to sell commercial legal expenses policies to our business clients.
Why? Commercial legal expenses policies are designed to assist companies in these situations. But if they have not followed proper procedures in the first instance, the policy is unlikely to provide an indemnity.
And I think this is where so many brokers have a problem in selling commercial legal expenses cover in the first place. Although we can tell a client all about security conditions and heat application warranties for handling their tools or their stock, we are reluctant to suggest that they should follow legal requirements in handling their employees.
An added concern is that we anticipate that the policy will not respond when the policyholder wants to make a claim, because they won't have followed proper procedures in dealing with their employees. So the easy option is not to sell commercial legal expenses insurance.
Following on from previous cases, the Link case has demonstrated that we, as an industry, need to get our own house in order in terms of sex discrimination.
It also shows that there is a real need for a legitimate insurance solution.
But as with all insurance, the policyholder has a duty to behave as if they were uninsured by taking reasonable care.
We must draw that duty of care to the policyholder's attention, so that they do not regard the policy as a licence to treat employees in a cavalier fashion.
If we can take the same approach to commercial legal expenses insurance as we do to other types of insurance, then we can generate a real “win-win” situation.
The policyholder is better protected against the cost of unnecessary legal costs and we have further demonstrated our “value added” to the policyholder by helping them prevent such actions in the first place.
I'm sure Link would agree that such an approach would be better than a £70,000 settlement plus costs.
Worldly Wise Webb
Mr. Webb of White and Partners is correct. We have had a number of such cases. When I took up one, as an example, with a senior head office official, he referred it back and a somewhat shaky little girl said the computer wasn't working properly. I cannot recollect the exact figures but it was a 100% increase reduced to 20%.
The answer is surely to refer back every renewal and contact head office if necessary.
Is it any wonder there is no confidence in Biba?
Appleton and Green Limited
Playing-field not level
With reference to your letter of the week from N. K. Webb in Insurance Times (July 13), I would like to add another example of certain insurers' lack of willingness to support their broker channel in competition with their direct arm.
On offering a lady client of some years' standing a re-broke at renewal to CGU Insurance at a premium of £380.52, we received a call from her husband telling us that CGU Direct had quoted the same cover at £311.61. Furthermore, we had in actual fact just replaced the husband's cover on his own car with CGU a month or so before at a premium of £326.29 but after being alerted of the cheaper rates by his wife's quotation, he applied to CGU direct for his own quote, which came out at £270.70.
On contacting CGU in Manchester for assistance in retaining these two policies, we were told by senior management that there was nothing they could do to assist, as quite simply CGU Direct was a separate company run independently of CGU itself. They appreciated that this situation arose from time to time but that was that. I would add that they declined to put this in writing.
Needless to say the client has now moved both policies to CGU Direct, writing to thank us for our service over the years and express his deep regret at having to leave us, but pointing out that he could not afford to ignore the price differences.
Taking into account the individual attitudes of Norwich Union and CGU and their reluctance to provide a level playing-field for the broker, I fear we can expect even more of the same in the future from the merged company. Time yet again for brokers to consider where their business is placed?
Arthur Doodson Brokers Limited