The pressure to compete on price, to adhere to regulation and compliance, to put in place the correct sales procedures and communications strategies are all barriers to entry, costing valuable time and money.
However, I strongly believe that mortgage brokers not making the effort to sell insurance are missing a trick, or two.
Mortgage brokers are operating in a market in which their value proposition needs to be strong if they’re to survive.
With insurers already offering self-service online models, introductory offers falsely leading to a focus on price, I say falsely because it’s not true mortgage brokers cannot compete and I’ll explain why, and the looming prospect of big businesses such as Amazon taking a cut of the market, mortgage brokers need to find a way to differentiate their service proposition.
This really is not as difficult as it sounds, the point of differentiation already exists – trusted council, quality advice and personal service have always been the cornerstone of mortgage broker advantage.
Insurance sales feed perfectly into this process of differentiation, giving mortgage brokers an opportunity to keep in contact with their customers in between the standard mortgage touch points.
Don’t need to compete on price
When I speak to mortgage brokers price is always the biggest reason quoted for not selling insurance. There still persists a common misbelief that you cannot compete on price.
My answer is simply don’t sell on price, you don’t need to.
The relentless drive for new customers driven by price has been the driving force behind the high level of churn the industry now experiences.
Churn to the extent we have now, where a customer can get a price that is below the true cost of the risk in the hope that the customer will simply stay with that insurer through inertia when the price doubles at renewal is bad for everyone – and your customers are very much coming to realise this.
What is more at any one time less than a third of the market is on an introductory offer, meaning there are still two thirds of the market open to mortgage brokers – customers that could be overpaying, or not receiving the right level of cover, and would appreciate trusted advice.
My answer to every mortgage broker still holding onto the misbelief is this, not only can you compete on price but you can achieve differentiation in terms of quality, service and value.
Customers are happy to pay a little more for peace of mind.
When you look at the data what you see is that they don’t enjoy shopping around and switching every year for introductory deals.
What they actually want is to feel valued and confident that they have the right cover first time.
In my experience customers value the knowledge a mortgage broker imparts, as well as the time taken to get the right cover for their needs, meaning that they don’t need to shop around themselves.
Differentiation also means staying nimble to needs and connecting with clients via proactive, timely and relevant engagement.