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Finding an online bargain does not automatically mean a good outcome – Personal Touch

by: Dave Edwards, commercial director of Personal Touch
  • 05/12/2017
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Finding an online bargain does not automatically mean a good outcome – Personal Touch
The concept of home ownership has always been predicated on the need for security and protection; from the elements and the threat of fire, theft or flood.

However, there is a suggestion within our industry that mortgage brokers are not selling enough general insurance to their clients.

Applying for a mortgage can be a gruelling process, especially for those customers who are unaware of the sheer amount of paperwork that it can generate.

And with brokers working longer hours than ever before to manage backlogs of documentation, it’s no wonder that important decisions and details can often get bypassed, by both sides, in the lead up to a mortgage offer.

But time constraints and paperwork fatigue are not enough in and of themselves to explain why general insurance has become such a tough sell for brokers over the past few years, and with new gaps appearing in the market to reflect changing social factors, the need to understand and combat these impediments has become a matter of some urgency.

Let’s see why.

 

Going it alone

A key source of complaint among brokers is that, with growing mortgage costs and other accumulative expenses, customers are less receptive to additional outlay than ever before.

There will always be a constituency of people who believe they are immune from the vicissitudes of fate, or are prepared to take a chance in order to save some money.

However, with more price comparison websites on the market, there has been a marked rise in clients going it alone and looking for an online bargain, irrespective of whether the product they select is suitable to their needs.

According to research conducted by the Association of British Insurers (ABI), around 24% of home insurance products are now bought online, while 33% of polled customers have expressed their preference for online providers.

 

Erroneous assumptions

Now, as we all know, cheap doesn’t necessarily mean good or comprehensive.

With one in five insurance claims now denied because they are not covered under the terms of a policy and almost 60% of customers making erroneous assumptions about what is covered (according to Axa), there is an obvious onus on brokers to advise and educate their clients by offering them the right option.

Customer engagement and a stark statistical presentation of facts are key to this process.

For example, every year around 25% of homeowners experience weather-related damage to their properties, while almost 20% of UK homes are now at risk from flooding.

With an estimated average of around £50,000 needed to repair each flood damaged home, the effects of having a claim rejected because the owner has opted for a cheap online deal could be catastrophic.

More than a third of general insurance sales in this country are still advised, but if brokers use their expertise to warn customers of the perils of under insurance there is no reason why that figure could not grow dramatically.

 

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