Legal assistance insurance would become unaffordable. Such reports have been appearing in various media for some time now. These insurance policies would become so expensive that they would no longer be accessible to all people. Of course that would be a bad thing. Affordable access to justice is important for everyone. That is why more and more people, both individuals and companies, have such a policy. If legal assistance insurance becomes unaffordable, as it sounds ominous, an important form of affordable legal assistance will be passé. What’s going on….
A legal assistance insurer first provided all legal assistance itself.
Originally, a legal expenses insurer provided all the legal assistance you needed. If the relevant dispute was covered, of course. And in most cases it still is. The insurer employs its own lawyers and lawyers who handle your case. This has a number of advantages, especially for the large, specialized insurers:
- the lower treatment costs prevent the legal assistance insurance from becoming unaffordable. After all, fairly established lawyers charge (very) decent rates. The lawyers employed by an insurer are employed, and would therefore be cheaper;
- furthermore, a legal expenses insurer has many specialists who often only deal with one or two areas of law. As a result, the processing time per file would also be shorter as a result of experience and routine.
It was therefore not possible for a very long time to hire your own lawyer. At least, not at the expense of the legal expenses insurer. This was stipulated in the policy conditions of legal expenses insurers.
Legal assistance insurance unaffordable? What has changed then?
For some time now, most legal expenses insurers have offered the option of engaging your own lawyer under certain conditions. However, only if legal or administrative proceedings have to be conducted. However, the costs are capped. You must determine the extent to which these costs are covered when taking out the insurance. The higher the cost maximum you choose, the higher the premium.
In April 2021, a consumer submitted a complaint to the Financial Services Complaints Institute, KifiD. He did not agree that he was only reimbursed for the costs of a procedure, from his own lawyer. This consumer wanted to engage his own lawyer at an earlier stage in the handling of his conflict. This was refused by the insurer. After all, legal assistance insurance would then become unaffordable. The Kifid determined that the consumer was right. Namely, the European Court of Justice had already ruled on this in a case that played in Belgium in 2020.
The Association of Insurers appealed to the Kifid and that case is now, October 2021, not yet completed. It is believed that the case with our southern neighbors, which falls under Belgian law, cannot be compared with Dutch law. The Association therefore ignores the Court’s ruling.
I personally think that insurers have little chance.
The European Court believes that access to justice should be as wide as possible. And that access does not only start with a procedure. But before; in preparing for a possible trial. And the costs for an own lawyer, the insurers would simply have to pay.
Do legal expenses insurers have a point?
The fact that legal assistance insurance immediately becomes unaffordable in those cases is going a bit too far for me. Also, if many people are already right, so at the start of a conflict, hire your own lawyer. Indeed, external lawyers are more expensive. Insurers are afraid that these lawyers will work in advance towards the cost maximum that is insured. And that the chance of success certainly does not increase. Because based on the numbers, insurers have good reasons to believe that it will be expensive. The number of cases that external lawyers will handle will increase. And from 1% now, to more than 13% in the near future. And that the extra costs could rise to € 345 million. The premiums for legal assistance insurance would then rise to as much as € 10 per month.
When is a private lawyer preferred?
With respect for the aim of legal expenses insurers to keep premiums affordable, self-interest also plays a role here. But sometimes it is simply better for an insured person, and above all more pleasant, to have their own lawyer. A lawyer based near him. Who he knows, and with whom he has a relationship of trust. For example, if it concerns a problem with the local government, an external lawyer is often better informed. After all, he works in the area.
Legal assistance insurance unaffordable? That’s a bit exaggerated.
Time will tell. Suppose that the premiums indeed increase by about € 10 per month. Then I think it is a bit exaggerated to say that the legal expenses insurance then becomes “unaffordable”.
And, in addition, many people will have to get their own lawyer in the future. So far it doesn’t seem that way.
Kees van den Berg
Kees van den Berg was an inspector at Delta Lloyd for a number of years. He has been an independent insurance adviser since 1988. Insurance on the internet has grown rapidly, but consumers and entrepreneurs often miss human contact. Depremie Comparison.nl has therefore remained an ordinary “old-fashioned” insurance office. With the personal service of the past and the digital technology of today.