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Opinion piece: If you don’t ask, you don’t get

Many firms continue to miss out on the valuable recurring revenue stream that GI presents, with clients missing out too

Securing deals for clients is a mortgage adviser’s bread and butter but against the backdrop of a fluctuating market there is always room for alternative and additional income streams.

This is where general insurance comes in, although many businesses continue to miss out on the valuable recurring revenue stream that GI presents. Advisers should think beyond the obvious buildings and contents sale and consider protection areas for clients more broadly.

There is currently a huge opportunity to discuss GI with remortgage clients. We have seen a surge in remortgaging recently, with activity in January up 54 per cent by value and 46 per cent by volume from December, according to the Council of Mortgage Lenders’ latest report. Yet, when it comes to discussing insurance with these clients, advisers often perceive it to be a tricky conversation; it is assumed they will have a policy in place already or will not be interested in switching mid-term.

This may be true but you will never know if you do not ask the question and, as a result, you could be missing out on valuable income. Indeed, with remortgages contributing about 35 per cent of all mortgage business last year, advisers lost potential earnings of over £6m from these customers.

It is not a given that all remortgage clients are adequately covered already. They may have basic home and contents policies in place but have they considered optional extras, such as home emergency cover? Or would they benefit from additional policies to protect their income or mortgage payment from unemployment?

There is also a chance their existing policies are due for renewal in the next month or two or that, in remortgaging to fund building works on a property, for example, their policy would need to be updated accordingly.

Inadequate cover

Our latest YouGov survey revealed that 37 per cent of people with contents insurance did not review it annually to check the level of cover was adequate. This means a lot of people would benefit from advice on which policy is right for them. The last thing anyone wants is to pay for an insurance policy only to find it insufficient when they come to claim.

The research also showed what a trick advisers could be missing when it comes to optional extras and the commission involved. For example, 43 per cent of clients with home insurance believed home emergency cover would be the most valuable addition to their policy, while 32 per cent of contents insurance holders said they would be willing to pay extra to ensure valuables were covered for loss or damage when taken out of the home.

A home insurance application can take just 30 minutes and offers an average commission rate of 27.5 per cent, so GI really should not fall to the bottom of the pile once the mortgage process is complete.

Although the reward may not be as substantial as a mortgage application fee, home insurance commission is paid for each renewal. As most people renew their insurance up to three to four times, this means recurring commission for no extra work.

In addition to the earnings opportunity, advisers should consider their moral obligation to make sure clients are properly protected. When someone has invested heavily in property, they need to protect that investment sufficiently, but not everyone understands all the options.

If advisers are not confident enough to provide this knowledge themselves, they can refer to the many introducer schemes offered by providers and networks.

There is no excuse not to offer insurance to clients. In doing so, everyone benefits. Customers will feel they have been advised properly, while brokers will feel they have given the best service with the added benefit of extra income.

James Watson is sales and marketing director at Paymentshield 

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