By acquiring its key rival in Canada in the legal expenses insurance market, ARAG Canada will be able to achieve its goals faster, CEO Barbara Haynes told the Insurance Portal.
Haynes is well suited to the task: She helped launch the Canadian operations of DAS Canada, the acquired company, in the early 2010s. She left semi-retirement to join ARAG in 2019, and took the helm of the firm in early 2020.
What prompted the takeover? ARAG’s heft in its core segment in Canada. Haynes says her company now controls nearly half of the premiums, with a volume of about $45 million. She estimates the total volume of legal expenses insurance in Canada at about $100 million. She is confident that this volume will grow as Canadians become more aware of the importance of this coverage.
As with any integration, aligning the two companies’ cultures will be the major challenge linked to this transaction, Haynes says. All the same, the two entities have many similarities, particularly their entrepreneurial nature, she adds.
DAS Canada, owned by Munich Re, had to think about shareholder returns as a publicly traded company. This is not the case with ARAG, which is a family-owned company, she points out, adding that they can thus have a longer term vision without having to consider the shareholders outside the company.
ARAG will now be dealing with 200 different distributors across the country as a result of this transaction, most of which are P&C brokerage firms. This network will facilitate ARAG's ambitions in Canada, Haynes says, because the company has a few other competitors in the market. They include Lloyd's syndicates, Entrust, a U.S. player, along with third parties that market a similar product. She expects more players to join over time, given the product's potential.
We need to raise awareness, she says, because providing access to legal advice can be very helpful. The more that awareness grows, the better for us, she says.
She compares the future growth of legal expenses insurance to that of other products that are gaining increasing awareness. The growing popularity of cyber insurance, directors' and officers' liability insurance and travel insurance, among other products, have drawn players from outside the industry, such as WestJet and Air Canada, into the market.
In the U.S., legal insurance is growing well because it is integrated in employee benefits. That is an approach the company is looking at here, Haynes says.
Digital: A powerful weapon
Innovation will also be key to making this product better known. These days, innovation implies digital. ARAG is rolling out chatbotsin some European countries, to complement its phone services. This was one of the key aspects of the deal with DAS Canada, Haynes says.
DAS Canada was not in a position to invest in IT to improve its prospects. ARAG strongly believes in digital solutions, which bring their customers efficiency. The transaction also lets the company grow enough to achieve economies of scale in its investments, she explains.
The COVID-19 pandemic also heightened the product’s appeal, Haynes continues. For one, the insurer saw an increase in calls from people who had lost their jobs. Although support from various levels of government has helped many people, a number of small business owners have contacted ARAG's lawyers for guidance in advising their employees. Interpretation of various contract clauses has also motivated several calls, says Haynes.
