Protection. This year, everyone is talking about it – or at least they should be, especially if they are mortgage brokers. 2009 will definitely be one of the more interesting years. For some working in the industry, it will be their annus horribilis; for others, it may not be. Much will depend upon the advisers concerned and the range of services that they feel confident in offering to their new and existing customers.
Until the credit crunch began to bite, a busy mortgage market kept most advisers fully occupied, particularly following the introduction of statutory mortgage regulation in 2004 through MCOB. With regulation came a lengthening of the whole advice and transaction process, and of course, mortgage regulation was followed hot on the heels by insurance regulation (ICOB).
Insurance regulation encompassed the very products designed to be offered alongside a mortgage, and yet the combination of MCOB and ICOB, together with the already lengthening application processes, ultimately caused the previously sustained link between protection and mortgage sales to break. This initially became evident during the first post-regulation upturn in mortgage sales during 2006.
For many mortgage advisers, there simply was not enough time, nor inclination from clients, to extend mortgage interviews beyond the already lengthened period. As a result, protection sales, through many mortgage advisers, faltered. This left many customers exposed to debt without appropriate life or health insurance cover. It was not anybody’s ‘fault’, and was not an intended consequence of this important and necessary regulation – but it did happen.
Today, however, we face a different world – one in which mortgage sales are down significantly. This has created opportunities for others to spend more time with the few new customers that they do have, and time to revisit existing customers on the subject of protection. Many advisers now do this – in fact, the graph below clearly demonstrates how successfully they do it. New protection sales are holding up very well, which is good for customers and supports advisers through the most difficult time since the early 1990s.
If you are not considering your new and existing customers’ protection needs, because you do not feel confident advising on protection products, then why not sign up to any one of the very many training courses run by providers, networks or service companies? Alternatively, contact the Chartered Insurance Institute and investigate its Financial Protection (CF3) module – although it forms part of the Certificate in Financial Planning, you can take this one paper on its own, and it does represent a great next step on from the protection section in Certificate in Mortgage Advice (CF6).
If you advise, or plan to advise, on protection, do not stop at mortgage protection, and do not assume that mortgages are the only event that trigger protection sales. To be a truly successful protection adviser, you must consider your customer’s wider needs. After all, mortgages are not the only outgoing that needs to be paid in the event of death or ill health, and of course, bread winners are not the only ones who need cover in place. n
Protection sales include all industry mortgage and non-mortgage life insurance and critical illness sales (including standalone critical illness) as reported by the ABI.
Mortgage approvals includes sales of mortgages to first-time buyers and homemovers as well as all re-mortgages, as reported by the CML. Figures do not include lifetime mortgages, further advances, buy to let and other loans.
