Leading legal expenses insurer ARAG has reported double-digit growth in its before-the-event (BTE) business and a ninth year in profit, despite what it said were the “challenging market conditions” for after-the-event (ATE) insurance.
The company’s gross written premium under management grew by 8.6% to £37.8m, in spite of a large number of ATE premiums for successful clinical negligence cases that remain unpaid
However, the Court of Appeal ruling earlier this month backing ARAG’s block-rated premium approach and pricing – and looking to curtail future disputes – should largely end defendant recalcitrance.
It said a profit before tax of £600,000 was ahead of forecast and “would have been substantially higher but for the outstanding ATE premiums that ARAG expects to recover over the next 12-24 months” following the ruling.
Speaking after the decision, David Haynes, ARAG’s underwriting and marketing director, said: “We are very pleased that a line has finally been drawn under the persistent and protracted challenges to the reasonableness and proportionality of block-rated ATE premiums for clinical negligence claims since LASPO.”
Its BTE legal expenses and assistance business grew by 14.2%, following a 17% increase in the previous year, which ARAG put down to its relaunched commercial legal protection products and emergency assistance range, in particular.
The company has also seen a significant increase in business with other managing general agencies and the London Market, since opening a City of London office in 2016.
Managing director Tony Buss said: “I am very pleased that we have been able to produce such a positive result in particularly difficult trading conditions for legal expenses insurers.
“In recent years, we have seen numerous providers leave the market, especially from the ATE sector, but ARAG remains strong and continues on our path of stable growth.”
“In spite of significant challenges, in the form of both new legislation and intense competition from less financially stable operators, we have proven that our focus on innovation, flexibility and service delivers a proven recipe for our business partners.”
“While we continue to grow in numbers, strength and new markets in the UK, we are also supporting our international colleagues in some of ARAG’s new territories, in Australia, Ireland and Canada, bringing affordable access to justice to people all around the world.”
Tony Buss will be speaking about the impact of the Civil Liability Act reforms on the legal expenses insurance market at PI Futures on 25 September in Manchester.