ARAG Legal Expenses Insurance Company Limited · DRN-6210812

The complaint Mr E complains about the way ARAG Legal Expenses Insurance Company Limited dealt with a claim on his legal expenses insurance policy. What happened Mr E had been injured at work and sought assistance from his union. The union referred him to solicitors who acted for him and that case was settled some time ago. He now wanted to issue negligence claims against the union and the solicitors. In August 2025 he made a claim on his policy to cover the legal costs for these claims. ARAG referred the claim to panel solicitors to assess and after considering their advice, declined to provide cover. Mr E made three complaints about the way his claim was handled, regarding: • the way a phone call was dealt with; • the time taken to deal with his claim between August and October 2025, when the claim was declined; and • the decision not to provide cover for the claims. ARAG agreed the phone call had been handled poorly and offered compensation of £75 for the distress caused to Mr E. It did not agree there had been any delay and said the decision to withdraw cover was reasonable in light of the legal advice received. Our investigator agreed there had not been unreasonable delay and the decision not to cover the claim was fair. She said the compensation offered for the phone call was fair. Mr E disagrees and has requested an ombudsman’s decision. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. There is a long history to Mr E’s claim and this was a complicated matter, but I’m not reviewing the whole history – this decision only deals with how this claim was dealt with between August and October 2025, and the specific issues addressed in the final response letters ARAG sent to the complaints referred to above. Mr E has provided detailed comments and information but much of this concerns the previous legal action and his claims against the solicitors and the union. I can’t comment on any other issues such as the underlying legal dispute or other claims he has made on his policy. And I can’t comment on the solicitor’s actions – I’m only considering whether ARAG has dealt with the insurance claim fairly.

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The relevant industry rules and guidance say insurers must deal with claims promptly and fairly, support a policyholder to make a claim, and not unreasonably reject a claim. The claim was made in August 2025. Mr E complained in October about delay. ARAG said it had taken until then because it was a complex claim involving multiple parties and it took some time to source and instruct appropriate legal representation to advise on the claim. Mr E was told in October 2025 that cover would not be provided because the legal advice was that he didn’t have reasonable prospects of success. Looking at the sequence of events I don’t think there was undue delay. The case involved several parties, was about litigation in another country, and concerned events from some years ago. It took some time for ARAG to obtain legal advice. I appreciate this was frustrating for Mr E but, given the circumstances of the claim, I don’t think the time taken was unreasonable. With regard to the decision not to cover the claim, this was based on the legal advice received. The panel solicitors said Mr E’s case did not have a reasonable chance of success. The policy terms say cover will be provided if the claim has reasonable prospects of success. This is a requirement of almost all legal expenses insurance. I think that’s reasonable – it wouldn’t be fair to expect an insurer to cover a claim if it’s unlikely to succeed. Insurers will obtain legal advice about the prospects of success and they’re entitled to rely on that advice unless it’s obviously wrong. ARAG obtained advice from an experienced litigation solicitor. It’s a detailed opinion setting out the relevant evidence, and explains why they concluded the legal claims do not have a reasonable chance of success. Mr E was advised that this would be reviewed if he provided a contrary legal opinion. That’s in line with usual practice and what I’d expect to see. Mr E has said there was a conflict of interest, as he has previously been involved in litigation with the panel solicitors. The panel firm wasn’t appointed to act for Mr E and was giving advice to ARAG to help it decide whether to provide cover. As I’ve explained, I can’t comment on the solicitor’s actions. Solicitors are regulated separately and have their own code of conduct. Ultimately it’s for a solicitor to decide whether they are able to take on instructions or are conflicted, and that’s not something I can comment on. With regard to the phone call, ARAG acknowledged this could have been handled better – Mr E should have been given a warning before the call was terminated, but that didn’t happen. Mr E would have been upset by this but ARAG offered compensation for the distress caused to him and I think a payment of £75 would be fair in the circumstances. ARAG said it would pay that sum into Mr E’s bank account if he provided the details for this. It doesn’t seem he did. Assuming the payment hasn’t been made, ARAG should now pay the compensation. Other than this, ARAG doesn’t need to do any more in relation to this claim unless Mr E provide a further legal opinion for it to consider. My final decision ARAG Legal Expenses Insurance Company Limited has already made an offer to pay £75 to settle the complaint and I think this offer is fair in all the circumstances.

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So my decision is that – if it has not already done so – ARAG Legal Expenses Insurance Company Limited should pay £75. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr E to accept or reject my decision before 13 April 2026. Peter Whiteley Ombudsman

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