“You may have already noticed – I’m very convinced in our product which I think has a lot of value,” said Renko Dirksen (pictured above).
Dirksen is on the board of directors for ARAG, the largest privately owned insurance company in Germany. The global firm, specialises in legal expense insurance (LEI).
“We do good things with our product and offer real benefits to people who find themselves in legal trouble,” said Dirksen.
Insurance Business met Dirksen, who is based at ARAG’s headquarters in Düsseldorf, when he recently visited Australia. He said the visit to his firm’s Australian business, that opened a few years ago, was key for getting a feeling about the challenges and opportunities here.
LEI, he said, is about access to justice and allows small businesses and individuals to pursue their legal rights without having to pay costly legal bills.
“I think this really empowers people,” said Dirksen.
He gave the example of the employee who is threatened by their boss and facing the prospect of losing their job.
“You’re less afraid [with LEI], because you know that all the legal fees will be covered and you will not go bankrupt because of them,” he said. “Then you don’t have to sign any agreement with your employer because you have a lawyer by your side.”
Across Europe, ARAG has helped 1,000s of people pursue their legal rights in cases including labour disputes, medical negligence and small businesses chasing up unpaid bills.
“It’s good to have legal expenses insurance coverage because then you can meet everybody on eye-level and you can pursue your legal rights no matter what your financial situation is,” said Dirksen.
However, while the product is an established offering in some European countries, it’s still a new idea in Australia. This has presented challenges for Dirksen’s firm, like the need for an education campaign.
“Part of the challenge is that it’s a product which you have to explain,” he said. “It’s not an easy to understand product, even for market experts.”
Dirksen said it’s also not an expensive product.
“If you compare the work you have to do to place this product, to sell this product, in relation to the commission, it’s a tough sell,” he said.
However, he said brokers and partners are very often won over to LEI after a conversation.
“We hardly ever end a conversation without having convinced the other side that this is a worthwhile product,” said Dirksen.
Natasha Gale (pictured below), CEO of ARAG Australia, said it’s not just the novelty of the product in Australia, there are also cultural challenges.
“Australians tend to have that laissez faire attitude, she’ll be right, it’ll be fine, and I’ll sort it out later,” said Natasha Gale, CEO of ARAG Australia. “But Australia is the second most litigious country in the world per capita.”
Gale said this litigious reality makes it something of a paradox that Australians are still relaxed towards their legal affairs. The firm’s education campaign is currently targeting brokers.
There were other challenges when ARAG launched LEI locally in 2019. The COVID-19 pandemic quickly followed making it very difficult to get out and spread the word.
The regulations here are also tighter than in some other countries.
“They [the UK] don’t have the same restrictions with target determination and cooling off periods,” said Natasha Gale, CEO of ARAG Australia.
The firm’s LEI offering in Europe has other advantages. For example, said Gale, a European telecoms company that’s an ARAG customer sells every mobile phone plan with an LEI policy.
“Those are some of the complexities of it but here in Australia we seem to get success through broker standalone, small to medium enterprises, under that 10 million turnover, for example, sole traders and then rolling that out through associations and group policies,” she said.
The firm is offering standalone and bundled versions of LEI.
“In Australia, we’ve taken a hybrid position,” said Gale. “We do some standalone, but we now work very closely with our broker partners and associations where we can bundle it.”
She’s happy with LEI uptake in Australia so far.
“I can tell you that the growth trajectory has been quite exponential from our base,” said Gale. “It’s not just about the numbers, the success has been around educating a broker market of nearly 4,000 brokers around LEI.”
Despite a growing gap between rich and poor, Australia still prides itself on being relatively egalitarian. In that context, Dirksen is confident that there is a market need for LEI and that more Australians can be convinced.
“If you look at the access to justice problem, which also exists here in Australia, it’s very much about people feeling that there’s not enough fairness in society and that only the elites can pursue their rights,” he said.
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