July 6, 2011 by Canadian Underwriter
Access to a lawyer or the legal system is increasingly difficult for middle-class Canadians, creating a demand for legal expense insurance (LEI), Barbara Haynes, president and CEO of DAS Canada said.
During an interview with Canadian Underwriter, Haynes and Dr. Jochen Messemer, a member of the board of management of ERGO AG, DAS’s parent company, described what they see as key differences between the European and Canadian marketplaces.
Messemer is responsible for ERGO’s international operations. He noted legal expense insurance in Europe is far more common than in Canada.
LEI typically covers legal and mediation fees for consumers and small- to mid-sized companies. The matters can range from employment conflicts to criminal charges.
In Europe, roughly Cdn$9.7 billion is written in LEI premiums each year, compared with the total $42 billion of premiums written across all lines of the Canadian marketplace. And while approximately 50% of Western Europeans have some form of LEI coverage, the concept is still relatively new to the Canadian marketplace, Messemer said.
“In Europe, there is a stronger likelihood that if you have an employment contract conflict, as an employee you would not just accept the severance package you are offered,” he said. “But, you would get a lawyer, backed with the legal assistance coverage, and have the lawyer talk to the employer, ideally, to avoid a court case.
“That is something that we see is much more common in Europe than in Canada.”
When Canadians hear the word “litigious” they assume the matter is a large class action case, adds Haynes. Few realize resources are available to them for smaller matters.
For example, Haynes points to a recent news report of vacationers that booked a holiday in Mexico and found out on arrival that their last night’s accommodation was not included in the package.
Another example is a criminal case in which a shopkeeper in Toronto was charged for performing a citizen’s arrest on a thief. He was found not guilty, but the case likely cost him between $40,000 and $60,000.
“These are cases where LEI would have covered the costs,” said Haynes. “We need to let people know that these resources are available to them.”
DAS, preparing to celebrate its first anniversary in the Canadian marketplace, has expanded into Ontario, BC, Alberta and the Maritimes. Product offerings now also include group or affinity plans, she continues. By the end of 2011 the insurer will also offer coverage as an add-on to existing home or auto policies.