The research went on to show that about 63% of customers bought insurance from their lenders because it was convenient. A staggering one in 10 thought it is was compulsory.
The jury is out on what percentage of business is introduced to lenders by brokers, but for the sake of this argument, I will say 65%. This takes into account the fact that some lenders only deal with brokers and some have a foot in both distribution channels.
It seems that while only 35% of mortgage business is arranged with lenders directly, some 63% of customers arrange their insurance dir-ectly with them. I know that not all mortgage writers have insurance permissions, but as brokers look at their customers’ holistic needs, the percentage of clients who buy from their lenders should be lower.
Back in the 1980s when lenders had quotas, one way for consumers to get mortgages was to buy all associated insurance from them.
I know apathy rules in many circumstances, but this shouldn’t be the case when the sole reason for brokers to exist is to satisfy customers’ needs.
I cannot see how treating customers fairly is being served if brokers satisfy one client need – the mortgage – without looking at the associated products.
It might be that customers want to do their own thing in respect of insurance and the like, but proactive brokers should at least point out the options and arrange comparisons for them.
The dearth of advice when it comes to insurance could be the tip of the iceberg. Which other products are being excluded? The list could include conveyancing and will writing, to name but two.
If these products are not being looked at, not only will customers get a worse deal but brokers could also miss out on substantial income streams.
Sometimes doing the best thing for customers is also good for business performance and this is one of those situations. All good mortgage clubs have insurance arrangements for their users and some even offer commission for the business referred by brokers who don’t have the necessary permissions to advise themselves. This surely is the way to go.