Simon Chalk

Mortgage Portfolio Services

On the whole, the support for general insurance products is not bad. However, the only point I would stress is that there is not a lot of vocational training on the subject. To advise on mortgages, brokers need the CeMap qualification but there is no equivalent requirement for general insurance. This is important as general insurance is a far more tricky area to complete properly. If brokers do not question their clients properly – which could easily happen – this could result in a costly mistake.

For many brokers this is often seen as a smaller part of the business – an add-on to mortgages. There is an Institute of Financial Services qualification for this area called CeRGI, which has been available for nearly two years and should perhaps be pushed more. Mortgage brokers should perhaps be encouraged to take such a qualification to ensure they are fully competent and confident when advising on general insurance.

Paul Winter

Ipswich Building Society

Selling insurance is complicated and time-expensive for mortgage brokers, so it is understandable that a large proportion of them would prefer the lender to handle the insurance, or they feel more comfortable passing it onto to a specialist broker. Many mortgage brokers are not particularly enthusiastic about general insurance. Rightly or wrongly, they look at the relatively meagre rewards they will get for completing a detailed and time-consuming insurance application and decide that it is not worth it. They believe it is not an effective use of time for them.

A lot of mortgage brokers also feel it is difficult to be an expert in everything and, because insurance products are becoming more sophisticated, they would rather be an in-depth expert in mortgages – than a jack of all trades and a master of none.

Lenders also have their own representatives on the road who make sure that all their mortgage intermediaries are fully up-to-speed with the latest products and criteria. Insurance providers do not do this because they have not really got the resources to provide this level of support.

Robin Williams

Calibre Homesolutions

The current environment means that income from general insurance products can be an important part of a mortgage broker’s overall revenue. However, for a proposition to be sustainable there are several key components to consider both from the intermediaries’ and borrowers’ points of view.

In terms of borrowers, key elements to consider include a competitive premium, a choice of providers and a wide eligibility criteria. For home insurance the latter could include properties in subsidence or flood areas or high-net-worth clients.

From a mortgage broker’s point of view the key elements include ease of process in being able to issue a quote and then ensure a risk is placed on cover at the appropriate time. They also need to obtain evidence that insurance is in place so as not to delay the lender advancing funds. In addition, brokers will want a sensible level of commission earnings and a sufficiently high level of service that does not impact adversely upon their reputation. Brokers need to consider all these elements and a certain level of support on these issues would be of benefit to mortgage brokers offering general insurance products.

Kim Barrett

KS Barrett & Associates

There is definitely not enough support for brokers in this area. It is not a regulatory problem because the Financial Services Authority (FSA) had no problem in extending my authority to trade in the area. Previous to FSA regulation, I was a member of the GISC, which was obviously a requirement to sell general insurance. In a sense, the FSA has widened my sphere of operations from when I was a GISC member.

Regulation increased costs and that started the slippery slide to questioning the cost-effectiveness of continuing to operate at low commission income levels. The area of professional indemnity (PI) insurance proved problematic. I imagine the attitude of the PI insurer is that unless I am an expert in the particular field, it is not happy with extending my mandate into this area as I might prove to be a greater risk. However, having been around mortgage products for 31 years and having a wealth of experience in terms of property insurance and contents insurance, the final straw has been the attitude of general insurers who refuse to grant agencies where there is evidence of low premium levels being introduced. It seems that with most product providers a broker has to have high street premises and about £5000 of premium income a year to be considered.

Any agencies I had for general insurance were taken away and the main reason seemed to be that I was not producing enough business to make the agency viable. However, I have never had a problem with any provider dealing with life and pensions business on the basis that I do not produce enough business and levels in this area can frequently vary. I cannot imagine there would be any more cost in operating a general agency for the provider than there is to operate a life agency.

Shaun Godfrey

Bankhall

By and large, few mortgage brokers bother with general insurance products and those that do often limit themselves to selling protection products. This is a real shame because they are ignoring a potentially extremely valuable revenue stream, and often it is one they need not even market to because they could, and should, be selling to existing clients.

The advent of depolarisation with the return of the multi-ties has seen product providers and others recognise the opportunities to cross-sell to existing clients. Mortgage brokers should be thinking along similar lines and leveraging revenue out of their own client base by selling them compatible products. They should consider adopting a truly composite model whereby they offer a range of financial services to clients. They can do this through utilising the support of a service provider that operates across several financial market sectors. Only by operating outside the boundaries of their expertise can traditional mortgage brokers hope to grow the business.