It would seem that, nationally, the average case size is quite similar. In the South East, mortgage proc fees are considerably higher due to house prices also being higher, so less protection is sold. The more the average house price reduces, the more protection is sold, thus bringing the average case size similar nationally.
Not offering a full remit of protection policies, recommending the correct cover at the right time and in a way the client can easily understand not only goes against Consumer Duty but also leaves both the client, you and your company unprotected against unforeseen eventualities.
In your and your company’s case, that’s a claim.
Boosting protection business
So, how do you increase income whilst also doing what’s right with regards to protection sales? Welcome to the protection-only adviser.
Why is this elusive character such a scarcity in an industry with a requirement worth a monetary figure in its trillions and growing?
Threaten to take away the ability to sell insurance from an adviser with low protection penetration sales and they’ll kick back like a mule during branding. I’ll lay money on them quoting the last sale they made with a commission of circa £2,000 and how you’re now taking away their ability to earn.
I’ve seen brokers with an eight per cent life to mortgage penetration rate argue their position.
Come on, that’s eight people in 100 that you’ve sold protection to. At that ratio, they’re the customers that begged you to offer cover.
So, here’s my proposal to make the subject less contentious.
The advantage of a protection-only adviser
How about you employ someone in an administrative role as a starting point? Let’s face it, there’s always admin work that is either not being completed or the adviser is completing late at night instead of looking for sales opportunities. This administrator is trained to sell life insurance, sits relevant exams and role plays until they are comfortable and confident in the importance of what they are offering.
For me, if you are training objection handling, then the sale hasn’t been made in the correct way and there’s a raised chance of cancellation, but that’s a conversation for another day.
This new super-administrator can now get to work on all those cases that have already completed with no life sale being made. In addition, any new cases that haven’t had a protection policy sold by the time the offer is issued gets passed across for a conversation. On this point, I’d also include those cases where the adviser has a signed ‘not interested’ letter on file.
Dare I say that these are often used to pacify compliance more than they are a true reflection of the client’s wishes after fully understanding their options and exposure.
The best of both worlds
After 12 months of selling life, general insurance and understanding the administrative side of mortgages, then, if interested, your super-administrator could take their mortgage exams and move into a full advisory role. One thing I’ll guarantee – those that follow this process will have a far higher penetration rate than your average mortgage broker who went straight into selling mortgages.
The reason being, the former sees life as an effort to do after completing all the mortgage paperwork, the latter sees the mortgage as a way in to sell protection.
A guide to setting key performance indicators (KPIs) for the super-administrator during this process:
- You always need to ensure that the sales are right for the client and correctly documented.
- All life policies (unless against the client’s specific wishes) must be put into trust.
- Wherever possible, a trustee meeting should be held to explain their responsibilities.
Points 1 and 2 are what’s right and proper, so a high percentage conversion should be set as a KPI.
Point 3 could have a lower percentage KPI, but if your super-administrator were meeting with trustees to explain that Joe and Sue are placing the policy in trust to ensure the money went to the right people, in a timely manner, and now sits outside their estate, so is not usually liable to inheritance tax, there’s a fair chance they would pick up on the ‘tax’ comment.
A simple explanation followed by the question: “Is your life policy in trust?” may potentially end up in a self-generated protection sale and possibly a new mortgage client that can be passed back to the company.
Worth considering? With so many product transfers making up your sales figures, incomes are down. Your existing clients already know, like and trust you, so why not offer a more complete service? It’s an easier sale than chasing new clients.
This is something that I’ve put in place with several of my clients who, within months, have administrators writing £10,000 to £20,000 in protection commission for an average of 15 per cent pay away.
