Bill Warren,

CMLS

General insurance regulation is very similar in structure to mortgage regulation. Brokers fall into one of three categories – directly authorised, appointed representative (AR) or introducer only. Brokers who are directly authorised for mortgage advice and sales must also become directly authorised by the Financial Services Authority (FSA) for general insurance advice and sales.

Brokers who are ARs can have one principal for standard mortgages and one for lifetime mortgages. In terms of general insurance, brokers can be an AR for a number of principals – and just as for mortgages there must be a multiple principal agreement between the principal firms before this can happen.

Another alternative is for the mortgage network to arrange with a general insurance network for all their own ARs to become ARs of that particular network. This ensures that every AR has access to what is often a wider range of products as well as specialised support on general insurance products and regulation. This also needs a multiple principal agreement in place. The alternative is to pass on leads on an introducer-only basis, but I believe most brokers would prefer to supply the customer’s general insurance needs in-house.

Matt Gilmour,

Infinity Mortgages

Mortgage brokers have been through enough with Mortgage Day and I can understand why they would not want to go through Insurance Day too. There have always been two camps with general insurance business, those that do it and those that do not. These two camps are generally differentiated by the tags prime and sub-prime.

For the prime mortgage broker, general insurance can be a significant proportion of total earnings from the transaction, whereas for the sub-prime broker the efforts and rewards scale is tipped much more towards the mortgage. The approach to general insurance by an individual mortgage broker will depend largely upon these basic economics.

All brokers should be ensuring that the client gets the right package for their circumstances. How the client then accesses that package is moot. I hardly feel that it is a mistake for a broker to adopt a tick-box approach. Forming partnerships can have any number of corporate complexities that may just result in the muddying of the waters for the client.

Carla Lavender,

BM Solutions

There is no single answer to this question. It depends on the specific broker, their attitude to regulatory risk and where their income is derived. It is clear that many brokers have been completely focused on being ready for Mortgage Day, and have therefore not been as focused on general insurance regulation. In fact, recent reports have indicated that many brokers in the industry are not even aware that it is happening. This is not a short-term decision and simply a way to secure easy income. Brokers need to make a long-term strategic decision for their business. If a broker selects the partnership approach then clearly they need to spend time assessing that partner.

Brokers must be aware that they are, at the very least, potentially exposing themselves and their own reputation to risk by aligning their brand to an external business. Whatever decision brokers take they need to be operating as efficiently as possible to maintain a healthy regulatory position. One of the key ways of doing this is to submit business online.

Our recent online survey has revealed that more than 90% of the market submits at least some of its business via this channel. Expect to see this number increase even further as brokers strive to cope with the demands of both mortgage and general insurance regulation.

Richard Fox,

Society of Mortgage Professionals

The question presupposes that there is an ideal solution that will meet all cases. However, in reality the most suitable business model will depend on the circumstances of each different mortgage intermediary.

The manner in which they have chosen to obtain their permission to do their mortgage business is the key factor and will impact on the way in which the broker operates in non-investment insurance. In all cases the over-riding consideration has got to be ensuring that the needs of clients are fully met.

This means product availability will be a factor as will the ability of the adviser to offer the highest quality of service and advice. It is about ensuring that client needs are properly met and it is about the experience of the adviser. It is also about product knowledge and technical skills, as well as demonstrating both initial and continuing competence. These requirements might well be met by referring business to an external expert or it might be provided in a one-stop-shop. The solution will depend entirely on individual circumstances.

Craig Easeman,

Exclusive Connections

As the industry changes so will people’s businesses. It will all depend on the particular broker’s experience and their knowledge of the insurance market and the priorities of the business in question. Selling insurance can mean getting involved in great depth to compare cover, policies and prices which also takes time, knowledge and experience.

Would you want to spend more time doing this when you could hand it over to a professional and still have an additional income stream? This also means that there are additional business opportunities for brokers who do not currently promote general insurance. Good business practices have shown that if you focus on what you are good at, everyone can benefit – but most of all, the consumer will benefit.

I do not feel that there is a definitive answer in this instance, some advisers may wish to have more control and offer a wide variety of products including general insurance, and this would provide clients with a one-stop shop image of the broker in question.