It’s not for lack of trying. DAS isn’t the first foreign LEI provider who’s tried to set up here. Back in 1990, the U.K.-based Legal Protection Group started issuing legal expenses insurance policies in Canada, says Kevin Girling, who was the company’s vice-president in charge of Canadian operations. Not long after, LPG withdrew from the market; Girling went on to found STERLON Underwriting Managers, an Ontario-based company that provides high-end legal insurance products to companies and licensed professionals, but not individuals. Girling faults the law societies for not doing more to promote it. For this type of insurance to really catch on, “you’d need the Law Society of Upper Canada to stand up and say, ‘This is a good system,’ which they haven’t done to date,” he says.
Ontario’s law society has theoretically supported legal expenses insurance since 1993, but doesn’t actively endorse it. The LSUC says it’s now looking at whether it should take a more active role in doing so, as well as examining barriers to its use. Other law societies are non-committal; a spokesperson for the Law Society of B.C., for example, says legal insurance is not among its priorities for the coming year. Girling thinks some lawyers might oppose LEI because it could drive fees down; not only that, “they’d have someone looking over their shoulder.” After all, if a lawyer lost multiple cases, “they’d just be draining the insurance fund.”
Yet there is one province where LEI has flourished: in Quebec, where the provincial law society actively promotes it. The Barreau du Québec spends about $125,000 per year on a public information campaign that includes a website, a hotline, television ads and pamphlets distributed through lawyers’ offices; it even provides coverage to its roughly 150 employees. LEI, which is sold through nine insurers in the province as an add-on to a homeowners or car insurance policy, covers claims of up to $5,000 for about $35 per year, though some areas, like family law, are not covered. Roughly 250,000 Quebec families have a policy. “We’ve tried to convince other law societies to promote it. They don’t seem interested for now,” says Pierre Gagnon, past president of the Barreau.
Even if they don’t seem interested, soon the law societies might not have a choice: the arrival of a heavyweight like DAS should be enough to give legal expenses insurance a real shot here. “You need a high-end carrier to invest a lot and make it work,” Girling says. “We just weren’t that size.” One impediment to designing a good legal insurance policy, Winkler says, is the unpredictability of each case. Some are quick to wrap up, while others can stretch on in endless litigation, driving up premiums. (In Germany, which represents half the LEI market worldwide, this isn’t a problem: lawyers’ fees are fixed, so insurance companies can easily calculate risk.) Beyond that, insurers are wary of what’s called adverse selection: the notion that people who’d buy this type of insurance are also the most likely to use it. That’s one reason union plans like the CAW’s are successful; within the pool of members, some will certainly be less litigious than others. Finally, such policies can be a hard sell because most people don’t think they need a lawyer, until they do.
DAS should be well-equipped to deal with these hurdles. By referring clients to a panel of lawyers who agree to work for a set fee, and imposing a maximum limit for each claim (family legal protection, for example, covers up to $100,000), the company has sidestepped concerns around endless litigation costs, Asplin says. As for adverse selection, “that’s always a problem,” he admits. “The answer is, you have to market the product very well, and attract a range of policy holders, not just litigious ones.” DAS is prepared to absorb some losses over the first few years as it puts down roots here. If it succeeds, other insurers could follow suit: STERLON, for one, may piggyback on DAS’s arrival to start offering some individual LEI policies, Girling says.
While legal expenses insurance won’t be the magic bullet that solves Canada’s access to justice crisis, observers hope it could be one part of the solution. “The U.K. and Canada share a common problem: people have legal rights, but can’t afford to enforce them,” Asplin says. “But it’s the basis of any democracy that people can enforce their rights—otherwise, what have you got?”
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