Legal expense insurance becomes a business essential

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As risks grow more complex, ARAG’s Natasha Gale explains why Australian businesses can no longer afford to skip legal expertise – and how they can access it

WHEN ARAG entered the Australian market around five years ago with its little-known legal expense insurance (LEI) product, the famous ‘she’ll be right’ national character strongly coloured thinking about the risks inherent in running a business. SME owners blissfully charged ahead through the legal minefield, never quite sure when they might step on a problem and always hopeful that, when they did, it could be safely ignored or that any entanglements would prove temporary.

ARAG Australia is a part of the ARAG SE Group. Operating for 90 years and now in 19 countries, ARAG is recognised as the number one legal insurer worldwide with over 12 million satisfied customers. ARAG Australia offers small and medium business owners, sole traders, tradespeople, individuals and families, residential landlords and private boat owners access to the legal system by covering legal costs for the defence or pursuit of insured events at a fraction of the cost of using a lawyer, significantly reducing risk exposure.

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6,000+ Australian policyholders

“Legal insurance is no longer a luxury; it’s a strategic piece that most businesses need to have in today’s environment”

Natasha Gale, ARAG Australia

One pandemic, one tough economy and many hours of broker education later, ARAG Australia chief executive Natasha Gale sees the hue of attitudes towards legal issues at businesses evolving. This evolution has coincided with the more in-depth and holistic insurance solutions on offer. “I think legal risks have become more complex, and the risks have expanded from an economic perspective,” she says. “Legal insurance is no longer a luxury; it’s a strategic piece that most businesses need to have in today’s environment.” Investing a few hundred dollars in premium for access to expert legal resources makes sense in today’s world. With growing complexity, higher stakes and an increased focus on managing risk, the cost of potential loss has never been more significant – something many didn’t face just a few years ago. Not having easy access to legal advice is a liability that can’t be so easily dismissed in 2025. “[LEI] provides businesses not only the tools to be able to be better informed because of those Day One Benefits that we offer, but it provides affordability in the pursuit of justice,” says Gale.

There is an increasing acceptance that legal matters can’t be left to amateurs, Gale says – whether that’s the business owner themselves or someone in their social circle with so-called ‘expertise’. “If you’re a business, you don’t try to manage complex tax matters … most people seek the advice of an accountant. So why wouldn’t you seek the advice of a lawyer [for a legal problem]? With LEI, you can ensure that you can do just that,” says Gale. “This is a product that provides protection, that allows those businesses to feel that they have at least some access to legal support or legal recourse in the event that something was to go wrong.” The bulk of issues that commonly arise on the ARAGAssist legal helpline are contract disputes, regulatory matters and employment disputes. Employment disputes can spiral into costly tribunals, contract disagreements can evolve into protracted litigation, and regulatory compliance issues can result in substantial penalties. For this reason, a key part of the equation for ARAG is its ability to provide quick access to correct information at an early stage in any budding legal wrangle. “The mitigation piece is really important,” says Gale. She encourages brokers and their clients to be proactive in using ARAG resources. “If you’re unsure, pick up the phone. You’ll be directed to the right area. If it does get to a point where the insured needs to make a claim under their policy, then what we have been able to do is ensure that there’s no gap in advice or expectations.”

One area where Gale has recently noticed an uptick in demand is in requests for advice on restrictive covenants when employees take key client lists and set up a competing business. She puts this trend down to existing businesses having less leeway to absorb a downturn. “Take away the ethical component, and businesses are just becoming more money tight … once upon a time, someone might have left and taken some data or intellectual property, and the owner would have said, ‘look, it’s not worth my while to chase after them’. But now they are saying, ‘actually, it’s worth my while, because every dollar that I lose is two that I have to make’.” Traditionally, businesses would have made a commercial decision not to pursue or defend a legal matter due to the prohibitive cost of using a lawyer. “Now, they have a viable option for legal action with LEI. It gives them a choice. A real option. It’s the freedom to

decide, ‘Do I want to go after this, or do I want to let it go? Do I want to defend this, or is it not worth the fight?’” Statistics back the idea that Australian businesses are seeking more legal advice: the latest data shows a 7.5% increase in demand for legal services last year compared to 2023, even on the back of a 12.6% increase in related fees.

ARAG is encouraging brokers to use the traditional June renewal period to do a housecleaning to assess what types of insurance clients will find most useful. “We know that when brokers have deeper conversations at renewal time, they gain useful insights into their clients’ businesses and learn about potential legal worries relatively quickly,” says Gale. “We want to encourage them to ask questions about their clients’ legal requirements and potential liabilities. It will help brokers know what the best products for their clients are. “What has changed in their business? Have they experienced any legal disputes or matters in the past insurance period? Is the business growing? Do they need to update their employment agreements? Do they have updated wills?” While clients are now operating in an environment where there is a stronger strategic case for a product like LEI, Gale says it’s equally important as a product most brokers should offer in order to avoid putting their professional indemnity cover on the line.

Brokers need to safeguard their own professional indemnity coverage, and including LEI as part of their discussions with clients can help reinforce this protection. Providing a beneficial product such as LEI can be an advantage for brokers, allowing them to both meet their advisory responsibilities and strengthen their client relationships. “The reality in 2025 is that LEI is now well and truly part of the insurance landscape, and with ARAG being the world leader in this space, brokers have a robust partner to provide comprehensive legal expense insurance solutions for their clients,” says Gale. “This partnership allows brokers to confidently address their clients’ legal needs and reinforce their advisory role, ensuring clients have access to essential legal protection.”

A gavel rests on stacked law books in a library setting

The economics of pursuing justice

Time for a June reset for brokers

Published 24 Mar 2025

“We want to encourage [brokers] to ask questions about their clients’ legal requirements and potential liabilities. It will help brokers know what the best products for their clients are”

Natasha Gale, ARAG Australia

90+ years of expertise

5 unique LEI products

10 million global customers

Operating in 19 countries

2024 vs 2023

Rising demand for legal services at Australian law firms

2023 vs 2022

Avg growth over 10 years

+7.5%

+1.3%

+3.5%

Source: Thomson Reuters Institute 2024 Australia: State of the Legal Market Report

Getting ahead of legal problems early

of LEI, we want to make sure that our brokers provide quality products to their clients as we know that with many adjunct products the cover can be less than suitable for a client’s needs. ARAG have developed five specialist LEI products to ensure robust coverage for our clients.” ARAG’s development of the LEI market turns out to have coincided with a maturing business environment that is moving away from simply hoping for best when it comes to legal issues. By providing affordable access to legal expertise and coverage for legal expenses, LEI ensures that SME owners have the resources and support needed to address legal problems properly.

A maturing market

ARAG has been the pioneer of LEI in Australia and, backed by the strength of its parent company, ARAG SE, it specialises in LEI as a standalone product. While several competitors have recently started offering LEI, this has been as an adjunct to other types of insurance. Gale sees the change in the market as proof that there is genuine need for the product – just as Europe and the US have seen a strong LEI take-up – as well as a need for brokers to be offering related cover as society changes. “While it’s great that many brokers now understand the value

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