Insurer rejects bid for legal expenses subsidiary over 'claims culture' image

Norwich Union (NU) has turned down a management buy-out of legal expenses insurer BTE Lawline on what it describes as "a matter of principle".

The insurer said it had decided not to accept the bid as the proposed business plan involved a diversification for the company from pure legal expenses into accident management, or claims farming.

An NU spokesman said: "As a company we have taken a very clear stance on our attitude to accident management companies and the claims culture associated with them.

"We do not see our stance as being compatible with accepting the offer of a management buy-out, under the terms presented to us, for BTE Lawline."

BTE Lawline was set up as a subsidiary of Hill House Hammond (HHH) to write legal expenses cover for the high street broker.

A market source said: "[BTE Lawline] could have held up to 500,000 policies as it took all HHH's motor legal expenses cover. What that would have made it worth following the closure of the high street broker is hard to say."

It is understood that BTE Lawline will now be closed down following the rejection of the management buy-out and the decision by NU to close HHH. The bulk of HHH's private motor business is to be transferred to NU Direct.

The legal expenses cover will be transferred to NU Direct's existing legal expenses provider, the RAC.

However, that account could also be up for grabs, as market sources said that NU was carrying out a periodic review of the relationship.