Mortgage News
Opportunity knocks for protection sales
There is always plenty of doom and gloom in the market. Whilst we consistently seem to manage to adapt our models to change there is consistently plenty of negativity about.
I’m not sure if this is just the domain of the online forums or a general viewpoint. My view is always to focus on the positives and let others worry about the negatives.
There is one obvious business opportunity for the rest of the year and that is protection. Yes I know you have heard it all before, we need to change our models and sell more insurance blah blah blah. You are right it has been an oft repeated mantra over the last few years.
However, this year there is a very real reason to talk to your client bank and it’s not just to help you increase your income. At the end of the year and the start of 2013 there are two key changes that will affect pricing in the protection world.
The first date for the diary is 21st December 2012. As you may be aware, a new EU Directive comes into force on this date where providers will not be able to price differently depending upon the sex of the applicant. All rates will be equalised.
Whilst we do not know the full details of any price changes the industry is in agreement that rates for females will increase and by anything up to 20%.
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Now is the time to review your client bank, especially females, and discuss all forms of protection. It is true that rates are already at a historically low figure, but there is still time to provide that extra service to your clients. Policies need to be on risk by the 21st December 2012 and not just in a provider’s office.
The second key date is 1st January 2013. From this date there will be a new corporate tax regime for protection providers to comply with.
A significant tax advantage will be removed in relation to how providers are taxed in respect of new life and critical illness policies.
The current tax regime is based upon income less expenses (i-e) which reduces the tax bill and allows for slightly lower premiums to be offered. This will be removed and it is anticipated that this increase cost will be passed on through increased premiums.
Talking with providers, they are expecting volumes to increase over the next few months in anticipation of both changes.
The key point is don’t miss this opportunity to talk to your client bank. These are real reasons to talk about the beneficial long term solutions. A genuine win-win.
The clock is ticking.
Martin Reynolds is chief executive of SimplyBiz Mortgages