In the good ol’ days brokers didn’t need to bother too much about selling protection alongside a mortgage.
There was enough mortgage business to go around so why should they create hassle for themselves?
But times have changed. The processing of protection business has come a long way over the last couple of years or so with costs and turnaround times reducing, partly due to increased online processing. However, providers must ensure that they keep their products simple.
In its recent annual Income Protection Insight report, Defaqto found there were more than 50 products available and that these varied widely in the type of client they targeted.
As a result the tailored approach had caused confusion for both brokers and clients resulting in limited take up.
Defaqto also asked brokers about their attitude to income protection and about 35% said that cheaper products would encourage more take up of income protection while 34% believed simplifying products would increase sales.
It seems that simpler products present a greater risk to the provider and increase costs for the client and that creating a cheaper product for the client inevitably means asking more questions at the application stage.
Brokers already have to battle against a perceived lack of need among consumers so the more financially attractive and simpler the process can be the better.
In terms of simplifying the products, using the same language as much as possible would be a step in the right direction.
To help to address the issue Mortgage Intelligence is piloting a scheme whereby members can refer clients to its in-house specialist insurance team for protection advice.
Mortgage Intelligence also has a scheme whereby we sell general insurance products to member’s clients and brokers receive half of the commission made on the sale.
Legal and General has claimed that despite the slump in the mortgage market, intermediaries remain optimistic about the prospects for the protection market with almost 80% predicting that sales will improve or least remain constant over the coming quarter according to its latest Adviser Confidence Index.
Many brokers are sitting on large client banks many of whom are likely to be under-insured.
The current depressed mortgage market and general economic downturn represents a great opportunity for providers, brokers and networks alike to generate more income from protection sales and the more support that those on the front line, namely brokers, can be given the easier and more successful it is likely to be.
I don’t believe that it should be too difficult to reverse the negative mindset towards protection if a little more thought and support is given to the sector and to what the client and brokers selling protection actually need.