Legal expenses insurance could improve average Australians’ access to justice, according to the Productivity Commission.

The “missing middle” – too well off to qualify for legal aid but not affluent enough to afford private lawyers – have fallen through a gap, the commission’s Access to Justice Arrangements report says.

Legal expenses insurance is one possible solution. The cover takes two forms, with “before-the-event” and “after-the-event” policies.

After-the-event tends to be available only when the chance of winning is high or the risk to the insurer is too great.

Despite legal expenses insurance thriving in the UK, US and Canada, it has not become established in Australia, where the unpredictability of legal fees and court costs makes it harder to assess risk.

The commission recommends the introduction of fixed scales for costs awards, which could resolve this problem.

However, given that legal issues are difficult to anticipate, many Australians are unlikely to prepare for such events.

Whether or not there is a viable legal expenses insurance market is ultimately for the insurance industry to decide, the commission says.