Legal expenses insurance plays vital role

In the recent article entitled 'The Kill Bill' on corporate manslaughter (Post, 7 August, pp 17-18), there were a number of statements apparently made by the directors' and officers' market on the value of legal expenses insurance, which I'd like to take issue with.

Firstly, LEI policies in fact provide wider automatic cover for criminal prosecutions as claims can be made for actions against both the entity (company) and all employees, not just those defined as directors and officers.

The automatic right for the claimant faced with a prosecution to choose their own solicitor with LEI is a huge positive, not a negative. Any reputable LEI provider will be able to recommend a suitably qualified solicitor to act but unlike under D&O cover, this will not be imposed as a condition. This means the claimant can avoid possible conflict of interest issues, choose a locally based firm if they wish, and yensure that their representative has suitable expertise.

It is also not fair to say D&O policies are more generous than LEI policies as high limits are available under such policies (up to £1m), plus these apply for each and every claim rather than in any one period.

Furthermore, no excess or deductible will apply, thus providing valuable ground-up cover; this is contrary to most D&O policies.

The claims process for LEI is not rigid; certainly at Arag we do not insist that the legal helpline must be used and 'prospects of success' won't be an issue as, in practice, there is always a more than 50% chance of successfully mitigating the sentence or fine. It is, however, fair to comment that the whole LEI market does not provide such a pragmatic response to such issues so insurance buyers should check the policy wording small print.

Lastly, on the issue of ease of trading and affordability, LEI is much quicker and easier to administer, not relying on formal renewal declarations.

Quotes are easy to receive either by phone or web and premiums are refreshingly competitive.

This is particularly true for broker-owned schemes that have the additional value of adding to broker branding and providing generous commission income to the provider.

Andy Talbot, Sales manager, Arag Legal Services.