A sister company to leading volume personal injury firm Minster Law is set to enter the legal expenses insurance (LEI) market with a promise to price cover more accurately.
The news came as the Yorkshire firm itself reported that it had turned around a loss of £2.6m in 2017 to a profit of £1.9m in 2018.
This was on a slightly reduced turnover of £35.1m, down from £36m a year earlier. Gross profit margin increased significantly from 31.8% to 36.1%.
Chief executive Shirley Woolham said: “Minster Law will continue its evolution into a tech-enabled, highly efficient consumer support business.
“We are proud of our strong heritage in personal injury law, but are able to offer a much broader range of propositions for insurer and broker partners, including entry into the LEI market through our Coral Insurance business.”
There was “a real opportunity to shake up” the LEI market, which Ms Woolham said needed an injection of new ideas to help customers deal with the impact of next year’s whiplash reforms.
“There will be more demand for legal expenses cover and insurers and brokers will want and need a more sophisticated solution that really works for customers.
“LEI is a much-misunderstood insurance product in the eyes of the public, so our aim is ensuring customers understand what they’re buying and it gives them confidence that they have the protection they need.
“Our PI and claims processing expertise gives us pricing and risk assessment advantages which will attract insurers and brokers seeking a stable, competitive rating approach and capacity providers in search of profitable underwriting.
“We intend to combine distribution and administration through Coral and draw on our vast claims processing expertise to accurately assess underlying claims costs and performance to provide profitable and stable returns for our capacity provider.”
Ms Woolham said a more detailed announcement about the products on offer would be made “in due course”.
Minster’s financial improvement has been in part due to a reduction in staff – from 548 to 464, even though the number of fee-earners increased from 216 to 230 – which cut £3.1m from its wage bill, as well as closing its York office so that all staff are now located in the Wakefield headquarters.
Ms Woolham stressed that the reduction in staff numbers was not a cost-cutting exercise – rather it was the firm making “very specific choices about what structures it needs” to be ready for the changing personal injury market.
Minster has grown its serious injury capacity and placed more staff in customer-facing roles, she explained.
“Improving operational efficiency and scalability was a key achievement last year and is a direct result of our investment in IT, automation and digital claims. This has been a top priority as we prepare for the post-reform world in personal injury, where margins will be thinner and most volume claims will be processed online.
“Any business in our sector that has not borne down hard on its fixed costs faces a bleak future…
“Minster Law is an efficient, debt-free business with an ambitious strategy. We’re well positioned to accelerate our competitiveness in the market, further invest in our digital capability, pursue acquisition opportunities and diversify into new revenue streams beyond personal injury.”
Ms Woolham explained that a lot of work has gone into the customer journey and providing “digital tools for clients to progress cases rather than just be a window in the case management system”.
She said her “biggest fear” about the new small claims portal was that it would not be focused on user experience: “Inertia is one of the biggest Achilles’ heels for people progressing legitimate claims.”
She was confident that Minster would be “on the right side of a suitable price” for small claims work, and though most of its work comes through insurers and brokers, “we have a view of a cost we will charge customers who don’t have LEI”.