This week, Mortgage Solutions polled brokers on how often they discussed GI with their customers. The largest body (39.1%) said they talked about GI with every client, while 15.2% did so with ‘most’ clients, and 10.9% with about half of their clients. However, 8.7% of those surveyed said they only spoke to a ‘few’ clients about GI, and the one in four (26.1%) said they did not discuss GI with clients at all.
Aaron Strutt, director of Trinity Financial, thinks general insurance holds obvious benefits, but says some brokers might just be too focussed on the mortgage element.
“We try to speak to every client,” he said. “I think there’s potentially a lack of understanding. Historically, a lot of advisers in the market didn’t want to discuss GI because they were so focussed on mortgages. It probably still is the case that a lot of brokers want to arrange mortgages and don’t want to talk about the associate insurance products.”
Martin Stewart, founder and director of London Money, thinks that GI is an undersold product which has strong revenue potentials.
Stewart says that while London Money does not talk about general insurance to clients “as often as we should,” he is “keen to add [GI] to the brand, as it is an under-sold product.”
“It’s something we’re working on,” he adds. “We are well aware we are missing an income stream which will add value to our business in the long run.”
The money problem
Helen Pierson, head of business development at Mortgage Bureau, says that while brokers should talk to every client, the costs might just not be worth it for some.
“In reality, advisers have so much to do that they don’t perhaps mention GI as much as they should. Some may actively steer away from it, perish the thought, as the amount of time and work that has to be done (such as explaining different levels of cover, providing quotes, composing suitability letters and completing application forms) make it a poor use of time, given the upfront remuneration.
“It’s a very price driven product and with networks wanting a cut of the commission it can result in the product offerings from the providers we are able to use becoming uncompetitive.
“In the past, building up a GI book always used to be a good way of generating ongoing income and adding value to your business,” Pierson continues, “but not all firms or networks pass on renewals to individual advisers and so the motivation to sell it is further reduced.”
Paul Flavin, director of Zing Mortgages, says that while they do not speak to clients about general insurance often, those that are spoken to often take up the advice.
“The truth is, advisers rarely discuss GI as they see very little income for their effort,” Flavin says. “They should be looking at the lifetime value of the sale but, that’s asking too much,” he adds.
Price or cover
Daniel White, managing director of White Financial Services, says that while a mortgage offer pack is given to every client with a home insurance quote inside, only 20-30% of clients take up the policy.
“We’ve often found that if we use a Defaqto comparison tool to illustrate the quality of cover for a premium that can be up to circa £5 more a month, then at least we’ve acted in the client’s best interests and tried to educate – it’s then down to the client to decide which is more important, price or level of cover,” White said.
“The majority of clients will source a home insurance policy solely on price rather than quality of cover, which does have an effect on take ups and can be a challenge for the adviser,” he added.