As a result, many advisers are reviewing their current business strategy to ensure they are being as business savvy as possible and looking for ways to future-proofing their business income stream.
Diversification appears to be the solution for many. Although being a mortgage specialist will continue to be the key focus, relying on just mortgage sales is no longer a secure business strategy.
Advisers need to maximise income from their current clients as well as attracting new ones, which may mean improving their overall client experience with new or different services.
As a result, an increasing number of mortgage advisers are now also offering to arrange general insurance cover for their clients.
One general insurance product which fits particularly well with the range of services mortgage advisers offer is landlords’ insurance.
Although the housing market is still fragile, more than half (56%) of advisers that responded to our recent Adviser Confidence Index felt that buy-to-let business was looking positive and expected business levels to improve by up to 10% during 2011.
So there appears to be a great opportunity for mortgage advisers to arrange landlords’ insurance cover to help their buy-to-let mortgage customers have peace of mind that their property investment is protected and, at the same time, improve their ongoing income stream.
In just over four years, the compounding benefits of renewal income from regular weekly household insurance sales could generate £30,000 or more in additional income for a mortgage adviser – something not to be dismissed, especially in the current environment.
The increase in buy-to-let mortgages to 1.15m in 2008 was fuelled by the appeal of rising house prices and investors buying rental property as a safe haven for their future.
The majority (85%) of landlords we asked still believe that property is a good long-term investment and indicated that they are looking to increase their portfolio of properties over the next three to five years, as confidence in the rental market improves.
That confidence seems to be returning, as buy-to-let lending rose by 12% in 2010. This time the increase seems to be also fuelled by first-time buyers being priced out of the market so increasing demand for rental properties.
For those mortgage advisers who may not have considered selling landlords’ insurance alongside their buy-to-let mortgage business previously, this looks to be an excellent time to consider entering this market, if sentiment and predictions are correct.
Adam Smith is head of intermediary accounts for Legal & General’s general insurance business
