Legal life events – how you can help your clients

Paul Lucas [00:00:05] Hello everyone and welcome to the latest edition of Insurance Business TV in which we will be zooming in on the legal expenses insurance space in Canada in association with ARAG. Now the LEI specialist has released some fascinating statistics in recent times on legal life events. It reported that 55% of those involved in legal live events spent anywhere from $1,000 to $9,999 on legal fees, while 20% spend more than $10,000. As ARAG’s white paper indicates when these events happen, they hurt. So what role can legal expenses insurance play in providing peace of mind and keeping people’s lives on track? On this edition of IBTV, I’m delighted to welcome ARAG’s Jeff Kless VP of Marketing and Strategic Initiatives. So Jeff, can you elaborate for us on the direct impact of legal disputes on the lives of Canadians, how it’s impacting them both financially and mentally as well.

Jeff Kless [00:01:08] Understanding the prevalence and impacts legal risks have on Canadians is very important for insurance professionals. As you said, Paul, 55% of Canadians have to spend between $1,[000 and $10,000  Just to handle one legal dispute and 20% have to spend more than 20,000. Now you add the layer that 1/3 of those Canadians had more than one legal dispute in the last three years, then they have to pay for it. And the financial impact is significant when you almost have two thirds of them tapping into their savings or another 40% having to take on even more debt, which is not ideal in this economic climate that we’re in the second big impact. Also, as you referenced, Paul is relating to the people’s jobs. 55% of respondents in our survey said that handling illegal dispute had a large to moderate impact on their job, day to day job performance. And what was shocking to us is that 12% of those Canadians, because they have to handle legal dispute, lost their job, and that’s by far the worst outcome that they can have. And then finally, by far the largest impact relates to mental health. Again, 71% of Canadians said having to handle legal dispute had a large to moderate impact on their and their families mental health. And again, the impacts were numerous and overlapping, where you got significant people portion of people seeing an increase their stress and anxiety for them and their family at home. They were feeling helpless that had feelings of helplessness. They were losing sleep or experiencing insomnia or just having making trouble making decisions, you know, for them and their family. Those three are the really big takeaways, and the risks and the impacts that Canadians face when they have an unforeseen legal life event. 

Paul Lucas [00:02:47] Yeah, well, if you don’t mind, yes, there’s one statistic which really jumped out at me, which was that less than half of the Canadian surveyed either lawyer to resolve their legal issues. Why do you think this is and what are the implications?

Jeff Kless [00:02:59] Well, the clear number one reason cited why costs associated with having to hire legal counsel to represent them. That is a clear access to justice issue in this country, especially when mortgage rates and food prices are going up. And public studies show that nearly half of Canadian households are just one paycheck away from missing their financial obligations going forward. The other reason why Canadians cited that they did not hire a lawyer is because they believe they could handle it themselves more quickly or more amicably on their own. So that means for your customers, as a broker or as an insurer, your customers are having to make a commitment in terms of time and effort to handle the legal dispute and also undertake, you know, what could be tense and stressful negotiations. And even after all, that, they may not be satisfied with the situation. And at that point, they’re faced with the challenge of a legal system that is complex, time consuming and not designed for a do it yourself approach, then they have to face the question, do I walk away from this? Or do I accept an outcome that maybe is not what I wanted out of the legal dispute? 

Paul Lucas [00:04:05] This is, of course, your area of expertise. So just give us a little bit of insight into how ARAG in particular is supporting Canadians in the in the legal time of need.

Jeff Kless [00:04:15] Happy to do so Paul. So really, at its core legal expense insurance, the value it delivers to your customers is that allows them to defend and pursue their rights. It protects their families budgets, and it saves them time and effort. And when you combine all those things together, that gives your customers confidence that they’re able to handle unforeseen legal event. And it all starts with unlimited access to a Legal Hotline, where your customer can call and speak to a lawyer to get legal assistance, regardless if it’s covered by the policy or not on any legal matter. That’s the first line of defense and a key legal risk mitigation tool. Now if the dispute is a contract, dispute and employment, tax audit, property protection or even a highway traffic ticket, if it’s covered under the policy, your customer is going to know that they’re going to have a legal representative by their side until the issue is resolved. They don’t need to go out search for a lawyer, we do that for them, we find the lawyer specialized in the area law they need in order to address the issue. And at the very end of that issue, when it’s resolved, they’re not going to receive a legal bill. So again, it tackles the financial impact where they’re not facing those legal expenses you referenced earlier, Paul, and also gives them confidence and helps reduce the anxiety and mental health impacts of a legal dispute faced by an average Canadian, or Canadian household.

Paul Lucas [00:05:32] I Imagine there might be a little bit of a disconnect, though, in some cases, perhaps some clients who just think “Well, nothing’s gonna happen to me”. So what top tips would you give to brokers who might be having conversation with their clients about the need for this cover?

Jeff Kless [00:05:47] Totally get it and you’re in someone who says this never happened to me or hasn’t happened to be odds are it probably will happen at some point in your lifetime? And what we hear from our brokerage is to start that legal rich discussion, it’s best just to ask questions, a real it works really well. So it could be a simple question. You know, do you know what you would do? If you working for a company for 10 years, we let go, or if the contractor that you hired to renovate your kitchen, walked away with your $10,000 deposit? Do you know how much it would cost to hire a lawyer to handle those issues for you? And can you afford those costs? Have you ever wanted to stand up for yourself or your family’s legal rights when you know something has been legally done wrong to you, but then you have to step back and go this is too much of a hassle or be too expensive to handle? Do you have the time and energy and ability to do it yourself to handle a legal dispute or a legal issue? And I think a powerful question too is, Do you know there are legal risk apps in your current insurance portfolio. And that legal expense insurance is a solution when it comes to handle a contract law, employment law tax audits so much more, and the policy will do the heavy lifting for you. And you’re not going to receive a legal bill at the end when you are trying to pursue or defend your legal rights.

Paul Lucas [00:07:02] And if you don’t mind, I want you to just delve into your crystal ball for us. Jeff, do you have any predictions for the space for 2020? For any trends, perhaps that you think brokers should be particularly mindful of? 

Jeff Kless [00:07:14] Sure. We fully expect continued significant growth in the legal expense insurance market in Canada. The research findings we’re sharing today and also research we did last year, where we surveyed Canadian small business owners about their legal risks and the impacts that had on them, absolutely make it clear there is an access to justice issue. And there’s also an insurance risk gap issue in this country that needs to be addressed. Also, what we found surprising is that Gen Z and millennials had to handle more legal disputes than Gen Xers and baby boomers over the last three years. We assume we don’t have the exact insights. But we assume that’s because these generations have a much tougher uplift to climb in order to economically establish themselves. And also those are generations that, you know, believe in social justice. They believe in equality and rights going forward. And as a broker or insurer or mutual, those are your future long term customers. So they need and want this type of coverage. Now yet on economic uncertainty, you add on the pressures and the mental health impacts that families and small business owners are facing on many fronts, and the fact that legal risks are ever present. There’s a reason why that we have brokerages, insurers and mutual partners, realizing this as a need that needs to be addressed. And the reason why they want to address that needs because it deepens relationships with their customers. It’s a point of differentiation. And most importantly to me as well, it fulfills the promise we make in this industry, which is to help people to help people when unforeseen events happen. So for us at ARAG, and you can kind of see it behind me here. This is who we are as an organization. And this word justice is what we believe in, we believe everybody should have access to justice. So as we talked about, you know, when legal life events happen, they hurt. There is a solution out there. And that solution is going to continue to grow. And we as an industry have, you know, an obligation and need to discuss legal risk with all our customers and provide a solution so we can stop the hurt. 

Paul Lucas [00:09:17] Yeah, fantastic insights. Jeff, I’m sure many people will want to check out your white paper. Tell us where they can find it. 

Jeff Kless [00:09:23] Yeah, just visit ARAG.ca There’ll be a homepage banner, you can click through from there or please do contact your direct business development specialists. They’re more than happy to provide information to you as well.

Paul Lucas [00:09:36] Great to have you with us Jeff, I’m great to have your company too dear viewer and keep yourself out of legal hot water and we hope to see you next time right here on Insurance Business TV.

Jeff Kless [00:09:46] Thank you, Paul. It’s been a pleasure.