MINISTRY OF JUSTICE
News Release (128/07) issued by The Government News Network on 23
today by Ministry of Justice reveals that less than one in four
consumers have heard of either Before the Event (BTE) or After the
Event (ATE) legal expenses insurance.
Legal Expenses Insurance (LEI) provides the policyholder with the
cost for legal fees in the event that they become involved in
litigation. It is a relatively inexpensive mechanism for resolving
a range of problems and legal disputes.
The research report produced by FWD reveals that there is a
considerable lack of information about the product both in the
public domain in general and at the point of sale. Awareness among
lower socio-economic groups (C2DE) is particularly low even though
this group appears to be more likely to need to use a BTE product.
The report also reveals that despite low awareness overall market
penetration of the product has increased to 59% of the population
(this compares with 50% penetration revealed by Mintel in their
report published in December 2006). The research estimates that
28m adults currently own the product, most as an add on to another
Welcoming the findings, Justice Minister Bridget Prentice said:
"The report gives us an insight into the current state of
the BTE insurance market. Whilst more and more people now have the
product, they don't appear to know how to use it. This is
particularly true of the more vulnerable members of society. BTE
insurance is important because it provides people with a means of
getting advice and assistance when trying to resolve disputes. I
would encourage insurance industry bodies and consumer groups to
try and deal with this problem "
Other findings show:
* Legal Expenses Insurance cover is often fragmented or even
duplicated. Due to lack of awareness many consumers are not aware
that they have BTE insurance
* The market is likely to expand over the coming years increasing
the number of consumers in this position
* The report recommends a number of steps that insurance industry
bodies and consumer's groups- such as the Financial Services
Authority (FSA) and Association of British Insurers (ABI)- should
take forward. These include:
* Agreeing ways of promoting LEI and providing more information
about the product both in general terms and at the point of
purchase (including communicating its benefits more widely).
* Developing ways to encourage policy holders to read their
* Changing the name of Legal Expenses Insurance to something
consumers are more likely to understand. One suggested alternative
is 'legal protection'
* The report also recommends that employers provide LEI to employees
* Additionally, Housing Associations could provide LEI for tenants
Officials at the Ministry of Justice have been discussing these
recommendations with the FSA, ABI, Housing Corporation and
employers groups to examine how these recommendations could be
Notes to Editors
1. 'The Market for BTE Legal Expenses Insurance: A research
report for the Ministry of Justice', by Oona McDonald, Ian
Winters and Mike Harmer can be found at http://www.justice.gov.uk
2. Until now the only other independent survey of the Legal
Expenses Insurance market was published by Mintel in December 2006.
3. BTE insurance products have been available in the UK since
1974. The research report shows that 93% of all households have
home buildings insurance in place; 78% have home contents Insurance;
4. The structure of the BTE market in the UK is complex. It is
sold in a variety of ways usually as an add on to motor or
household insurance. It is also sometimes sold attached to travel insurance.
5. The vast majority of BTE products are sold through
intermediaries consisting of national brokers, broker chains and