Posted by Samuel Gosney
Legal Indemnity Insurance – Cynics or Sentimentalists?
In Oscar Wilde’s Lady Windermere’s Fan, Cecil asks Lord Darlington what it takes to be a cynic, to which the latter replies ‘one who knows the price of everything, but the value of nothing. The converse of that, a Sentimentalist, is one who sees an absurd value in all things, but knows the price of absolutely nothing’.
In practically every facet of their lives, 21st century consumers want to have their cake, eat it, and keep the plate, with a desire for the best service at the bottom price with the lowest risks to themselves; insurance inevitably takes a hit from this, as evidenced by the relentless rise of the aggregators driving a wedge between consumers and expert advice on what can be complex financial products. The results of the “Super Complaint” presented by the consumer lobby and subsequent FCA investigation into the pricing of insurance may of course have an effect on pricing in the future.
In general insurance, there is an intransigent tug of war between consumer advise and consumer price, with the ‘drive ‘em low’ markets on one end of the rope, and the importance of consumer advice on the other. Nowhere is this felt more strongly than the legal indemnity market, in which the demand for cover is driven by legal professionals, who quite rightly will not sign off on their work until appropriate measures have been taken to mitigate even the smallest transactional risk to their clients (and by proxy themselves). At the same time, more and more brokerages have entered the fray of Legal Indemnity insurance in the knowledge that claims are low and business is high.
Insurance brokers should, and for the most part do, exist to assist consumers or SMEs in the placing of insurance business, and this assistance should always extend to fully qualified advice with a professional guarantee if that advice goes wrong. Pile ‘em high and sell ‘em cheap will simply not work in the legal indemnity sector, and legal representatives everywhere should be wary of utilising brokers who advise only on price, or worst of all give no advice whatsoever. When things go wrong, and things always go wrong, the responsibility will be put firmly on the shoulders of the legal reps, not the brokerages whose offering stops short of advice and recommendations. Similarly, legal professionals tempted to approach insurers directly with the false enticements of ‘premium reductions’ and ‘bespoke wording’ should be equally wary; every client should receive advice from their legal representative, and by simply being passed a policy directly from an insurer, the only recommendation that can be compliantly made is on the basis of premium, and that is a very dangerous move to make.
That said, we at Mason Owen also acknowledge that there is no place for Sentimentalism within this fast-paced complex environment, and will often resort to single-market choices, strictly on matters where the variety of policy terms between insurers is non-existent. But we do this following extensive and regular market exercises, where we appraise exactly what the market is offering, and balance several different factors when making our ultimate recommendation.
Every market exercise we carry out comes with the certification you would expect from a leading firm in this class of business which carries the hallmark of excellence that is Chartered Status. It’s presumably why we work regularly with senior individuals from over 50% of the top 100 law firms with Real Estate departments in the UK, and some of the country’s largest surveyors, developers, and housebuilders. By arranging Legal Indemnity insurance through us, you can rest assured you’re making the right choice. With over 100 years’ combined industry experience, we are experts in what we do. Our extensive knowledge, Chartered Status, and personal approach guarantee that you receive the very best advice on every single enquiry, time after time. Now only a true cynic would argue against the value of that.