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Legal expenses insurance assists with access to justice

Focus on Insurance law: Hasn’t become mainstream in Canada yet
|Written By Michael McKiernan
Legal expenses insurance assists with access to justice
Julie Macfarlane says legal expenses insurance would be a good option for the increasing number of Canadians who earn too much to qualify for legal aid but still can’t afford counsel.

The legal profession should renew its focus on legal expenses insurance as the product slowly but steadily gains traction in Canada, says the former head of the Canadian Bar Association’s access to justice committee.

John Sims headed the committee in late 2013 when the CBA announced its aim to have 75 per cent of middle-income Canadians covered by legal insurance by 2030. The ambitious target was unveiled in the committee’s “Reaching Equal Justice Report: An Invitation to Envision and Act,” which noted the popularity of the product in jurisdictions outside of North America.

Legal expense insurance policyholders, which include businesses and individuals, receive coverage for some or all of the costs associated with certain legal situations. The report said that around 40 per cent of Europeans had some sort of coverage, including virtually all households in Sweden, where carriage was made mandatory in 1997 to offset the impact of falling legal aid funding.  

“In principle, it makes a lot of sense. It’s not a panacea, but it can bring access to justice to a certain group that wouldn’t otherwise be able to meet their legal needs,” says Ottawa-based Sims, a former deputy minister of justice and deputy attorney general of Canada.

“I think it may be time for us to come back and have a fresh look,” he adds, noting that the concept has yet to hit the mainstream in this country.

At the time of the CBA report, estimates put the total Canadian market for legal expenses insurance at around $11 million to $12 million in annual premiums, with the bulk of that amount paid in Quebec, where the Barreau du Quebec had previously spent $2 million in its drive to promote the idea to consumers.

“That was a massive and very expensive campaign by the Barreau, but even after that, the take-up was still only around 10 per cent of Quebecers,” Sims says.

Kevin Le Messurier-Girling, president of legal expenses insurance company Sterlon Underwriting Managers, says the Quebec bar set the gold standard in terms of promotion of the industry. 

“There’s plenty more the legal profession can do. Outside Quebec, law societies have done some things to raise awareness, but they’ve never advanced in the same way, which I think was a huge mistake,” he says.

“I always thought lawyers should be doing more, because the end result is a client who walks through their door with money to spend on a legitimate case.”

Despite that, Le Messurier-Girling says the industry is finally primed to burst into public consciousness.

“In the last year, we have seen explosive growth. Insurance brokers and [managing general agents] are really embracing and understanding it, so it’s increasingly on everyone’s radar,” he says.

Kent Pitkin, vice-president at insurance wholesalers April Canada, says the market has grown significantly since 2013 to more than $20 million in annual premiums but that it is still not reaching its potential.

He says a lot of his job involves educating potential customers about the idea, since much of the public remains initially skeptical about this type of insurance.

“They think they won’t need it,” Pitkin says. “But once they understand what they’re getting for their money, it’s a no-brainer.”  

One group that doesn’t need a hard sell on the benefits of the product, according to Pitkin, are those who have had a legal problem in the past.

“Their eyes are opened to its potential, because they know how much a lawyer costs per hour and what you can spend on a court case. So it becomes quite apparent to them what a good deal they are getting for an extra few hundred dollars of premium,” he says.

“Our society is becoming more litigious, and I think that’s going to help more people grasp the value of legal expenses insurance.”

Julie Macfarlane, a professor at the University of Windsor’s faculty of law who runs the National Self-Represented Litigants Project, agrees that legal expenses insurance would be a good option for the increasing number of Canadians who earn too much to qualify for legal aid but still can’t afford counsel.

“People in the legal profession understand very well that legal problems can come at you from nowhere, but if you’re outside the system, you think it’s not going to happen to you,” she says.

In addition, she says, the poor reputation of lawyers among laypeople doesn’t help matters.

“There’s a really widespread mistrust of lawyers. Almost everyone has heard a story about someone who went to a lawyer with a problem, thinking it would cost them $1,000 to solve, and they come out of it with a $30,000 bill,” she says. “When I run this past people, they always ask why they would want to buy a policy that will give lawyers more money. In their view, it would be like buying hurricane insurance if you thought all the builders in your neighbourhood were corrupt, which is unfortunate, because it has lots of potential.”


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