Stockton, speaking during a broker panel session at the Financial Services Expo in London’s Old Billingsgate, said that around two-thirds of mortgages were completed without the appropriate level of insurance.
“I sold my first mortgages in 1987 and before I could get the completion I had to get the direct debit receipt to show that I had sorted life cover for that loan,” he said.
“I think it’s quite disgraceful that only a third of people who take out a mortgage get the right protection, which means that two-thirds don’t. We have a duty to cover our customers in all circumstances.”
He said across Countrywide and Mortgage Intelligence the protection conversion rate was around 60% but he feared protection sales were still likely to fall further.
“It still annoys me that around 40% of our clients go away with little or no protection. It’s a great sadness in ‘87 everyone was covered and here in 2013 we’re talking about protection. It shouldn’t go backwards but I have a fear it will do, you can already see it going down in the last few months, we should sell protection, buildings, home insurance alongside mortgages.”
Fellow panellist Jeremy Duncombe, director of mortgages at Legal and General, said instead of focussing on mortgages, advisers should use protection to build loyalty amongst clients.
“It’s very short-sighted to say that I’m okay because I’m getting enough mortgages through the door.
“Now is a fantastic opportunity for intermediaries to build their businesses for the long term with some really loyal customers.”
John Cupis, managing director of PMS, said he had also witnessed a slump in sales during the last quarter: “In the last three years across Sesame and PMS protection sales have grown phenomenally, that’s because brokers tend to sell enough to make a living.
“But in the last three months, these protection sales have flattened off because the scale of new mortgage enquiries has gone through the roof.”
TenetLime managing director Gemma Harle added brokers who relied on protection sales to stay in business during recent years should not discard insurance so quickly.
“I’m amazed at how short our memories are. A lot of businesses wouldn’t have survived if they didn’t have a protection book,” she said.
“That wasn’t that long ago. It’s scary to think we’re talking about a much bigger increase in mortgage activity next year, how far is it going to go down? You are not servicing your clients if you are not considering their protection needs.”