Inside Legal Expense Insurance Claims: What Do We See?

You are listening to The Legal Solutions Podcast with ARAG, exploring legal expense, insurance, and protection beyond the policy.

Pete Tessier: 

Hey, we’re back with The Legal Solutions Podcast with ARAG, and we’re going to be talking about claims. My name is Pete Tessier. I’m here with Curt Wyatt, and we are going to bring on a guest here from ARAG to talk about what happens when you have legal expense claims and how that’s a little bit different than your normal claims process when it gets into the property and casualty sector and why ARAG stands out in its value proposition. What do you think, Curt? 

Curt Wyatt: 

Absolutely, Pete. It’s really interesting to see how claims are handled in this scenario. It’s a different part of the industry. It’s not your normal line of property and casualty insurance that I think the bulk of our industry is used to. 

Pete Tessier: 

No, it isn’t. And what Karen’s going to explain a little bit is why legal expense has a different process once a claim’s been made. I think the most enlightening part of this is we’re going to learn a little bit about what resources happen. This may be different than the adjusting and restoration process that we’re all accustomed to. This has a different flow-through, and Karen’s going to talk a little bit about the value proposition that comes and why, when you pay a claim, what you learn from it. 

Curt Wyatt: 

And I think what also sits in my mind from this interview, Pete, is how the service is more than just you make a claim and an insurance company writes a cheque that ARAG, when hired, becomes part of your company’s legal solution. They’re behind you through a variety of opportunities to learn, prior to a claim, maybe help you create a solution to stop future problems within your company. 

Pete Tessier: 

That’s right. Some of the things that happen are really about risk mitigation. But hey, enough from us. Let’s bring Karen in and hear it right from her. A lady who has some amazing experience in this industry and background and why she’s chosen to support this product and the value proposition of legal expense insurance. Now, we’ve got Karen Fletcher in and she’s the VP of Claims for ARAG, and welcome to the ARAG podcast, Karen, and thanks for joining us here. 

Karen Fletcher: 

Thanks, Pete. Thanks for having me. 

Pete Tessier: 

Hey, look, everyone’s got their own journey into insurance. What’s a little bit about yours? How you came into this role, where you’ve been on it? Because I think that’s going to help tell a little bit of the story about what you do and the value you provide the ARAG’s insured customers when claims happen. 

Karen Fletcher: 

So, I started in insurance immediately fresh out of university. I was looking for a job with my brand new BA, didn’t know what to do with it, and State Farm was hiring, so I went straight into claims. I was at State Farm for 11 years, and, at that point, I then moved to the Dominion of Canada, which then became Travelers Insurance, and I was there for 18 years, also in claims, moved into a management role and I honestly thought that I would die at Travelers. I thought I was there to stay. 

And then one day, ARAG tapped me on the shoulder and said, “Hey, come take a look at us.” I had some really great conversations with the then CEO, as well as other members of the senior leadership team, and they were so passionate about access to justice and they really believed in what they were doing, and I felt like this was what I had been missing in my career. I really wanted that passion and that ability to really help me because that’s what called [to] me in claims is that ability to help people. So four years ago, I made the move to ARAG, and it was the best decision I ever made and it worked out very well for me. I’m now the VP of Claims. I started as the claims manager and have loved every day of being here. 

Curt Wyatt: 

Karen, that’s super interesting. It’s Curt here. And let’s face it, that’s the best part of our industry is when we can handle a claim and make people whole again. And on the insurance podcast, we talk a lot about the P&C industry. We talk about claims and how they can change people’s lives when the proper insurance is in place. Let’s dive a little bit more, though, into legal expense insurance. How and when and where do claims happen? Because our listeners are curious. 

Karen Fletcher: 

So, first of all, our policyholders are private individuals or just regular people, but we also insure lots of businesses. So we have medical professionals, we have small businesses, restaurants, real estate agents, lots of different backgrounds of our people. And I would say, just to give you a bit of background, the main types of claims that we see, number one is contract disputes. Our second most popular type of claim is employment disputes, and our third is something called property protection. And so you can see it covers a wide range of people’s lives, so they happen to anyone at any time. 

People, they will all of a sudden lose their job. And so we are there to help them with that. They have issues with their neighbours especially. I lived in a condo during COVID and I think that during that time my neighbours made me crazy and I wish I had ARAG at that time because that would’ve given me the remedy to maybe deal with some of those crazy neighbours I was dealing with. Happens all different times of our lives. We see people of all different ages. It’s lots of different times of their lives where they need us. Sometimes it’s as simple as them calling our helpline and just asking some questions and that resolves their issue. And then sometimes it goes beyond that. Their legal issue has progressed and they need a lawyer and then they arrive at our doorstep. 

Pete Tessier: 

So, Karen, when you think about that legal aspect, you talked a lot about contract disputes. A lot of this value proposition back to the insureds is maybe dealing with something they don’t already have access to, which is something with businesses, is not everyone has a lawyer or they don’t want to call a lawyer up because they use them for very specific things. Is this product sort of filling a gap for businesses, then, who need resources that they may not be able to afford or have in-house for themselves? 

Karen Fletcher: 

Absolutely. Our insurance is meant to cover people where the gaps fall in traditional insurance. Interesting point you made about they have a lawyer. We see a lot of businesses, small businesses, and they have a lawyer or somebody like myself or you, and “I have a friend who’s a lawyer and we think we have a legal event and we can use that person to help us with our, whatever’s happening with us legally.” The problem is that my friend, the lawyer, might be an expert in tax but knows nothing about contract law. Whereas, when they come to ARAG, and we support them in their claim, we’re going to give them a lawyer who’s an expert in their area of law, who we know is going to do a good job for them. You’re not paying your friend, the lawyer, to learn and to make mistakes. You’re getting the most bang for your buck for your type of legal event. 

Curt Wyatt: 

Karen, that’s interesting because, again, like I said earlier, I think when it comes to the P&C industry, we get fairly comfortable learning how claims work and learning how the insurers react to claims. And in your case, you guys get very involved in the early stage where you’re almost eliminating the claim, maybe, in many ways and giving that advice. So instead of the claim being tuition to pay to learn, don’t you find that it’s a little different for you? And what are some of the improvements that you’ve made and ARAG has made to help the policyholders? And what can you share with the brokers to improve their outcomes when they’re trying to talk to a policy, a potential policyholder when it comes to buying this product? Because it sounds like it’s not the same as it is a traditional insurance product when it comes to making a claim. 

Karen Fletcher: 

Definitely very different from traditional insurance. And I would say, so message to the brokers is the most important thing is you have to have it to use it. It’s like when your house burns down—that’s not the time to buy policy. You have to have it before the incident happens. And, really, it’s about our brokers being aware of our product and what we, sorry, it’s about our brokers being aware of the product and what we can do for the policyholder and really getting that message out there. That’s why we spend so much time doing training with our brokers. We share our claims story so that they can know exactly what our policy will do and how we can support people. It’s really the messaging to make sure that they know what’s available to their customers. A lot of times brokers will think to submit a claim to their E&O insurer or to the general liability insurer, but they sometimes forget that we’re in the background and we can help them out. 

Pete Tessier: 

So, Karen, thinking about that, one of the phrases we often hear now in insurance is that claims are where the tuition is paid. It’s where we learn. What has ARAG and yourself learned over time about the kinds of claims that you do, and how has that shaped the value proposition that you try to educate brokers with? Because, obviously, we’re selling a bit of a niche product and that takes a little bit of a different sales pitch and skill set. How are you using the claims information to say, “Hey, you should be talking about this when you’re trying to sell this product”? 

Karen Fletcher: 

The education piece is the most important piece. I think that they need to understand what we are and what we cover. For us, it’s about looking at the types of claims that we have and continually thinking about our claims experience. How can we better communicate to our brokers? Your program has this type of coverage, but we’re looking at your membership, we’re looking at the types of claims that they’ve submitted, and maybe they actually need these kind of coverages that would better suit their needs. 

Or we continue to look at the coverages we have and we see gaps where maybe we’re not seeing a lot of uptake or a lot of acceptance rate and maybe we need to be rethinking what we’re doing or thinking about our product and how we can grow from there. It’s really interesting. ARAG is in 19 countries across the world and every country offers different products. So we have meetings with them, we have an opportunity to learn what other countries are doing, and we find ways that perhaps we can change some of our offerings to make it better suit our customers here in Canada. So lots of learning for us just from what we’re seeing on the claims intake, what we’re hearing from our brokers, and what we’re seeing internationally as well. 

Pete Tessier: 

Okay. So let’s take another spin on that kind of angle, Karen, because, obviously, you’re learning from a lot of different regions and things like that. So coming back down to the point of sale here, and I know you work in claims, but claims, again, is where we pay the tuition to learn. [A] client buys legal expense insurance for security. When they have to use the product, how do the benefits come in? Because it is a different process than filing a claim in another traditional sort of property and casualty product. This is a different way of doing it. So how do clients experience those benefits once the claim’s submitted? 

Karen Fletcher: 

So, as I mentioned, every claim starts with our legal helpline. So the opportunity to speak to a lawyer as soon as they submit a claim. Or before they’ve even submitted a claim, they can talk to a lawyer. And I would say that in 90% of the times their issues are resolved just having that access to the legal helpline. They can call as many times as they need to for as long as they need to, and, in most cases, that gets resolved. But if it can’t be resolved at that point, then a claim is submitted to my claims team and we, from there, we will gather all the information. If there’s anything missing, we can work with the customer to gather what we need. We can pay for expert reports. From there, we are going to assign a lawyer who has the right skill set to handle their claim. 

So I talked before about how, “Oh, I have a friend who’s a lawyer” or “My cousin is a lawyer.” Well, this way we’re making sure that we get the right lawyer. If you use the wrong lawyer, you’re going to be paying more money for them to learn. You’re going to pay for their mistakes. Things are going to take longer because they don’t know the right way that these claims are traditionally handled. And then from there, it goes to the lawyer. They’re working through the legal process, but my claims team remains involved because the average person hasn’t had much experience in going to court, being sued, or suing somebody. It’s confusing. It’s intimidating. It’s very daunting. And we stay with them through the life of the claim so that if there are any questions, any concerns, any issues, they can reach out to us and we can help them through that. 

Sometimes the lawyers will explain things. It’s not always clear. It’s not easy to understand for the average person. So we want to make sure that there’s understanding. We’ll also see times where our claims are very different because we pay the legal expense, but we don’t pay the indemnity. So at the end of the day, that’s our customer’s own money. So they tend to be very emotional. They’re very involved in the process. Sometimes when that happens, you get somebody who’s going to call the lawyer on a daily basis or send emails or leave the messages, and every call, every email, every message, that’s reducing their limits of indemnity. So we are there to be that intermediary to make sure that, that money is being spent where it needs to be spent so they can go as far as it can in that litigation process. So we’re really there as a resource to our policyholders. We also make sure that the billing from the lawyers is correct so that, that money is going as far as it can. And then we’re just helping as an intermediary between both parties through the life of the claim. 

Pete Tessier: 

Where you started on your answer, Karen, you talked a little bit about sometimes the claims are filed and resolved, so without making a claim. So someone can actually submit a claim, get legal advice, but not actually be penalized for making a claim. Am I understanding that correctly? 

Karen Fletcher: 

Yes. Yes. 

Pete Tessier: 

That’s really cool. And so, how often does that happen? Do you have stats on that? 

Karen Fletcher: 

Well, like I said, about 90% of the people who call in with legal questions, just it gets resolved at that point. And then we do have quite a few where it might just take, we might not need to go through litigation. It might just be once the other party knows there’s a lawyer involved, then they’ll walk away. I don’t have those stats, but there are quite a few people that we never actually have to go into litigation. Just having the lawyer involved makes all the difference. 

Curt Wyatt: 

Having a lawyer involved. And you said this earlier, Karen, how you guys are working to pick the right lawyers to make sure that you have the expertise to get the answers to the policyholders is critical. How overall, though—just out of curiosity—how, overall, is the response from the legal community when it comes to your organization reaching out into these various law firms? I imagine sometimes it’s geographical because you want to match up lawyers within certain regions, provincial laws change and what have you. How is the response? And do you ever find it difficult, at times, trying to get maybe an expert in a field in a certain city? 

Karen Fletcher: 

No. So our claims are across the country, and so we make sure that we have lawyers in all the major centres. So we’ve got somebody everywhere that we need to. We work with some larger law firms who are nationwide, but we also have a few smaller firms that we deal with to deal with specific issues. A big product for us is condo and strata business, especially in British Columbia. And we have a number of claims involving warranties and British Columbia. So that required us to have quite a few firms out there that were specialized in warranty. So we’re really careful about making sure that if we see emerging claims, that we are making sure we have the correct lawyers, but just how they feel about our claims. Two things to that: our lawyers really appreciate how we are different from traditional P&C claims in that they are really experiencing and being a part of access to justice. 

They really like that they can be there to provide somebody with this legal assistance at a time where they might not have otherwise had it, and they really value that opportunity. So our lawyers also really, really love our policies because they’re seeing all these really interesting and unique claims in areas of law that they don’t traditionally see from property and casualty insurers. So the employment disputes and the contract disputes and a lot of our claims are really interesting and unique situations that they wouldn’t have encountered otherwise. They love how interesting our work is, but, like I said, they really value that access to justice and helping people in those really difficult times. 

Pete Tessier: 

And now that ARAG has become such a presence in the market and stuff, we’re seeing this critical mass of growth in everything. Are you finding that there are people in the legal community reaching out to you saying, “I have this expertise” or “We specialize in this” so that your network of resources for the insurers is also expanding? Is it working so that not only are you seeking out expertise, the expertise is coming to you because they believe in the product as well? 

Karen Fletcher: 

Absolutely. This year alone, we’ve added several new law firms to our roster because people are aware of us. They want to work with us. They love what we’re doing. They love our work. But, again, we’re very careful about making sure that we bring in the right people to support our customers. We want to make sure that they’ve got the expertise, that they’ve got the knowledge, that they’ve got the time in, and they’re really going to do the best job for our policyholders. 

Curt Wyatt: 

Hey, Karen, this was a real pleasure getting you on chatting claims, chatting about how to prevent claims because, like you say, your lawyers and your team of support quite often can cause this to not be a claim, which, let’s face it, that’s a nice change for our industry to have that type of opportunity to share that with policyholders. I think the brokers out there will be delighted to hear how it works, what goes on behind the scenes to make sure that their policyholders are getting the best advice. 

Karen Fletcher: 

Thank you for having me. I’ve enjoyed the conversation. 

Pete Tessier: 

Curt, I learned a few things here from Karen, and one of the big ones is that there is a large aspect of the emotional involvement from the claimants. They are really invested in the outcome and that the lawyer and the access that ARAG provides really actually guides them through a lot of things that are not just a business issue, but an emotional issue. 

Curt Wyatt: 

Well, it’s emotional because you’re still having, as a policyholder, you’re still having the potential to actually have to still write the cheque because as ARAG comes in to help you with, as it’s called legal expense, it isn’t coverage to settle the claim. So keep that in mind from the interview, and that was a lesson for me is that, hey, if I’m a policyholder, I really want to know what’s the settlement going to be. And, potentially, I imagine some of the settlements are covered by the liability policy that’s in place or potentially not—depending on the type of case. 

Pete Tessier: 

Absolutely. And when it is your own money, you want to make sure you’re getting the expert advice to deal with this. And that’s something I don’t think is really understood, and it’s probably really important in the broker value proposition when you’re selling this, is that there is a team of people to get you the right kind of legal advice. So maybe you’re a small business owner and you have a lawyer who you’ve used for some contractual things. Well, you call them up and they say, “Well, we can take this in-house.” They’re a business, too, but that’s not their expertise. When you’re dealing with ARAG, they are finding those experts in the class of legal expertise you need. They have a network across the country. And as we know with any business, the problem you may have may not actually be in your jurisdiction either. 

Curt Wyatt: 

Totally right, Pete. And the other thing is how they draw on expertise. And when you talk about the jurisdiction you’re in, maybe you just don’t have a local lawyer who has a strong skill set in the type of case that you’re up against. So, hey, what a bonus, is you purchase this policy and then from that, you’re not just getting some coverage, but you’re also getting a better solution when it comes to finding a legal team to help you potentially not have a claim in the first place. 

Pete Tessier: 

That’s exactly it. I think Karen has done an amazing job at outlining what these processes are like. So when you start selling legal expense insurance, you’ve got some education here about what goes on behind it and how they support the continued education about the claims process. That’s a huge value proposition, and I think it goes a long way to giving brokers another feather or another arrow in the quill, so to speak, of what you can use for your clients to target some great opportunities for sales and protection with them. 

That was The ARAG Legal Solutions Podcast. Thank you for listening.