Big Interview: Dave Haynes

As first seen on Insurance Post

ARAG UK CEO Dave Haynes spoke with Insurance Post to discuss the impact of the legal expenses insurer’s acquisition of DAS and how Labour’s legislative changes make its products more relevant than ever.

At the beginning of last year, legal expenses insurance provider ARAG acquired its longtime rival DAS UK, creating a combined UK business with gross written premiums in the region of £220m to its name.

For Dave Haynes, who took the reins as CEO of the combined business in April this year, ARAG’s partner was a familiar one.

He joined DAS as an underwriter straight out of school in 1984 and spent the first two years of his career at the Bristol-based insurer.

In 1992, after six years away at Allianz Legal Protection – which he joined at its inception in 1986, working his way up to senior underwriter- he rejoined DAS, initially in a sales role.

“Everyone should do it,” Haynes says of the experience, “if you’re underwriting or you’re in management, because it’s a real eye-opener and you get to know the customer.”

It was during this stint at the insurer that he got his first taste of running a business. In 1997 he was sent to St Albans to manage a business with a team of around 50 people that DAS had acquired.

Upon his return to Bristol two years later, Haynes joined DAS's senior management team, running its underwriting and product team until 2005.

Starting ARAG UK
By this point, he and a small group of colleagues were beginning to feel restless. Then opportunity came knocking: Düsseldorf-based legal expenses group ARAG had trained its eyes on the UK, where it lacked an operation.

“We were quite fortunate that we decided to leave at the time that they were looking to make an entry into the UK, and between the six of us that set it up, we had all the necessary functions covered,” Haynes says.

ARAG UK received authorisation in the summer of 2006 and started trading as a managing general agent, with Brit as its sole capacity provider.

Haynes and his fellow ARAG UK trailblazers – who included Tony Buss, his predecessor as CEO, and Andy Talbot, who remains at ARAG as director of after-the-event, broker sales and marketing – had accumulated the know-how in the legal expenses market that enabled the UK business to forge a path forward.

“We knew there was an opportunity to come out with something that was a little bit more bespoke and tailored,” Haynes remembers.

“As an MGA, you can never quite be as cheap. If an insurer decides it’s going to write to a much lower margin or write some kind of marginal business, it can do that.

“If you’re writing as an MGA to a carrier that always says they want to work to a margin of X, you’ve got to keep them on side. You can’t cut the margin.

“So, we knew we couldn’t compete on price. We were never going to be the cheapest. That’s not how we set up.

“Most of our business we obtained in the early days was high net worth, and it was all about product innovation, and a tailored and high level of service.”

By the point of acquiring DAS UK at the start of 2024, ARAG UK had grown to a business with around £70m in gross written premiums and a headcount of around 170 people.

Acquiring DAS UK
When DAS UK’s Munich Re-owned parent company Ergo decided to offload the business in 2023, the ARAG group jumped at the opportunity. The acquisition was announced in July 2023 and completed the following January.

“Having left DAS 20 years ago, it seemed quite surreal at the time,” Haynes says.

He joined the executive management committee of the combined business as director of underwriting, along with Talbot and Buss, who led the business through its first 16 months post-aquisition.

“His intention was always to kind of see it through the start of the integration,” Haynes says of Buss.

“Round about the summer of last year, we were talking with the group about succession planning and Tony signalled his intention to retire.”

Haynes subsequently became CEO and now leads a business of over 900 people, 700 of whom are based in Bristol, where the company brought together all of its staff under one roof at the start of April, coinciding with the beginning of Haynes’s tenure as CEO.

Insurance company
Haynes says that the two businesses complemented each other well, with DAS UK giving ARAG, which had always operated as an MGA in the UK, its own insurance company, as well as a law firm.

In January this year, DAS Legal Expenses Insurance Company was rechristened ARAG Legal Expenses Insurance Company, and the task of moving all business to the in-house insurer began.

“That was a huge advantage of the acquisition,” Haynes says. However, the move means waving goodbye to some longstanding capacity partners.

“I looked after the underwriting relationships,” he continues.

“We used Brit, HDI, Scor, and we had some of our own capacity as well through the group, and they were all fantastic relationships.

“We got on really well with all of them, I really valued those relationships, and we looked after them.

“But of course, we were an MGA, so we were never quite in control of our own destiny.”

Lawyers
To an extent, a similar story is underway with regard to ARAG’s legal panel.

While Haynes says the company isn’t looking to run everything through the in-house law firm it now has thanks to the DAS acquisition, he concedes that the new ARAG will end up working with fewer law firms and that it is looking to “harmonise” its panel.

“It’s a balance,” he says. “The law firm can only take certain types of cases and certain types of claims.

“For instance, it’s not clued up on things like clinical negligence. It’s just not got the expertise to do that. Is it worth employing in-house to do that? Maybe, but not right now.”

Outlining the capabilities of ARAG Law, he says: “It’s very strong in things like contract, property, consumer and personal injury, so it will do those cases, and it will do some of the more complex cases.

“But there are a lot of cases that are quite unique to the type of business we do, and it wouldn’t be our intention to insource those.

“For example, for foster carers, we have a lawyer who attends police stations to defend and represent carers in the event they get any accusations against them, and they do that 24/7.

“That kind of service is really unique, and we built that up over the years, so we wouldn’t look to replace that.”

Integration
ARAG now finds itself at the end of an 18-month integration process that was completed at the end of June.

Besides transferring business into its newly acquired insurance company, the work of the past year and a half has involved bringing together teams from the two partners.

“We went through a lot of pain at the start when we integrated the businesses, and we did lose a few people within the hierarchy of the business, who decided they didn’t want to be part of it,” Haynes says.

“The acquisition was about growth; it wasn’t about slashing jobs. It was all about growth.

“But of course, in certain senior roles, people felt it wasn’t for them, or they wanted a small senior job, so there were a few casualties at that point.

“Generally, retention rates are really good, and we’ve got a lower turnover rate than we did 18 months ago.”

From here on out, Haynes says the team has entered a “transformation” phase that will run for another 12 to 18 months.

“That’s about how we can deliver better products for our partners, better service to our customers, and a better place for our people to work,” he says.

Technology forms a key part of how Haynes hopes to achieve this. The business is working on deploying a new claims platform, in the hope of automating and streamlining processes to improve the customer experience.

The wider ARAG group is also investing and experimenting with artificial intelligence.

Haynes says ARAG's subsidiary in the Netherlands is already making use of AI within its in-house claim handling and may provide a template for the UK business to replicate.

He cites document summarisation and booking legal advice calls as possible applications of AI within the business.

Expanding distribution
Haynes speaks passionately about the importance of extending the reach of legal expenses insurance, something that for him amounts to a moral mission as well as a business imperative.

He recounts the story of ARAG’s foundation by attorney Heinrich Fassbender in 1935 in Düsseldorf: “He said everyone should be able to assert their legal rights, not just those who can afford it.”

However, the UK market, where legal expenses insurance isn’t typically available as a standalone product, presents a challenge to that mission.

“We’re very aware that our products, unlike how they’re sold on the continent, are sold predominantly as add-ons to core products,” Haynes says.

“We are always looking at ways of extending the reach of those products and increasing penetration. But we’re reliant on brokers, MGAs, insurers and lawyers to sell our products.”

The business runs training events and workshops with the aim of increasing knowledge and understanding of its products, in the hope of not only boosting uptake but also usage.

ARAG has also joined the Law Society’s 21st Century Justice project.

“They’re looking at how more people can access justice and they recognise that we’re not very good, in the UK, at enabling people to get access to justice,” Haynes explains, referencing the increased difficulty of accessing legal aid over the last decade or so.

“We have to do more. I think we’ve got a duty to do that, to serve customers, to offer them something, because you’ve either got to be, unfortunately, right at the bottom end of the kind of socio-economic ladder or at the top where you can afford it.

“But there are a lot of people in the middle or slightly towards the bottom for whom, if they haven’t got legal expenses and have got to fund it themselves, it’s expensive.”

Legislation
Prospective legislative changes may aid ARAG’s efforts to sing the praises of their products.

One of the most consequential bits of legislation currently working its way through parliament in this regard is the government’s Employment Rights Bill, which is expected to increase employers’ exposure to legal action.

The bill, which has passed the House of Commons and is now being scrutinised by the House of Lords, proposes, among other things, reducing the qualifying period for unfair dismissal from two years to day one.

Stipulations around zero-hour contracts and fire-and-rehire practices are also notable.

“The law is definitely moving in favour of the employee, so the employer needs more protection,” Haynes says.

ARAG is anticipating more employment claims as a result of the prospective law, which presents an opportunity on both sides: insuring employers through its commercial legal expenses products on one hand, and the employees through their family legal expenses products on the other.

“We have to look at the impact on our family business, where we give employees the right to pursue claims, and then on the commercial business, what the impact is of defending claims,” he continues.

The Renters’ Rights Bill – which, like the Employment Rights Bill, has cleared the Commons and is progressing through the Lords – could also be consequential, particularly in light of the landlords’ legal expenses products ARAG provides.

Haynes says that ARAG routinely has teams analysing the impact of likely legislation.

“We try and look ahead at what’s on the horizon and make an adjustment to our pricing,” he explains.

“It’s not an easy sell sometimes. But you’ve got to be proactive, because otherwise you’re going to be chasing your tail down the line.”

Any claims that these new pieces of legislation do give rise to will be entering a court system struggling with well-publicised backlogs, which, Haynes says, further push up the already considerable cost of pursuing a legal claim.

This too, he feels, presents an opportunity for ARAG to emphasise the value of legal expenses insurance.

“We proactively try and seek resolution,” he says. “The last thing, really, within legal expenses that you want to be doing is turning up at court.

“Legal expenses are all about resolving the dispute, getting the parties together to mediate, arbitrate and giving legal advice.”

Ambition
So, where does Haynes think capitalising on all of these opportunities to sell the value of legal expenses insurance can take the business?

He says that ARAG has a three-year plan to hit gross written premiums of £300m – up from £220m at the point of the aquisition – by the end of 2027.

In terms of where that growth is expected to come, he highlights ARAG’s commercial offering, which accounts for around half the business but which he feels the company can continue to make inroads with.

“We’re always reaching new businesses and finding ways of increasing our kind of penetration to those areas and increasing usage,” he says.

“If we can increase usage, then we can increase our premiums, and that’s how we can grow.

“If you look at our penetration in the UK, it’s not that dissimilar to somewhere like Germany, but they sell it standalone, and the awareness and understanding of the product is a lot higher, so they use it more and they charge more.

“That’s where we’ve got to get to.”

He also feels ARAG should be able to strengthen its “relatively strong” family account: “The market’s probably at around 30-40% penetration, so there’s still a lot to go for.”

Finally, he says that there are opportunities to grow through landlords and motor products.

On the latter, says there’s room to partner with market leaders and capitalise on the changes ushered in by the whiplash reforms.

“The market’s crying out definitely for good solutions, fair value, and good outcomes,” he concludes. “That’s really what it’s about, and those conversations are much more prevalent now than they ever were.”