Protection In the eye of the storm
The economy is still suffering waves of fallout from high inflation to rising unemployment. But an uncertain outlook is all the more reason to protect yourself. Francis Higney investigates
by
Francis Higney, freelance journalist
We are in the eye of an economic hurricane. The Bank of England’s Monetary Policy Committee has kept UK interest rates on hold at 0.5% and unveiled no new quantitative easing measures. The number of homes repossessed in the UK last year dropped by 24% to 36,300 according to the Council of Mortgage Lenders. Throw into the mix the news that
brokers introduced two-thirds of all first- time buyer mortgage sales in 2010 and that the buy-to-let market has rebounded with lenders granting 102,400 new loans, 10% more than in the year before, and it appears that all seems set fair for economic recovery and the housing market will soon be back to where it was a few years ago.
But the UK Consumer Prices Index annual inflation rate rose to 4.4% in February, up from 4% in January, putting further pressure on the Bank of England to lift interest rates.
Unemployment is also rising and total UK mortgage lending fell to its lowest level for nine years in 2010, with the value of mortgages advanced at £136.3bn - down 5% from £143.3bn in 2009 and the third year in a row that the figure has fallen. “As we go through 2011 the number of people facing payment pressures may increase if interest rates rise, and
48 mortgage Introducer APRIL 2011
as a result of the spending cuts that have resulted in reductions in the level of public support available,” says the CML’s outgoing director general Michael Coogan. Most observers are agreed that mortgage borrowing and completed sales will stay at their current low levels. As for existing homeowners, more than two million people have used credit cards to pay their mortgage or rent in the last 12 months, a leap of 46% in a year, research by Shelter has revealed. This research brings into sharp focus how keeping a roof over their head has become a daily struggle for millions across the country.
How have we got ourselves into such a situation? Why were the majority of these people not sold relevant insurance? Is mortgage payment protection insurance, for example, still suffering from the fallout of the scandal surrounding the wider PPI market?
Shelter from the Storm Geoff Hall , managing director of Berkeley Alexander, says he can understand why some advisers are steering clear of MPPI but adds that there is no need to. “It’s a great product when sold right but
if brokers don’t want to get involved they can introduce a lead to someone like us,” he says. “We take on the responsibility for the sale, enabling you to earn money from that introduction and know your client is protected.” Neil Galjaard, Paymentshield’s insurance
director, believes that brokers don’t decide not to not sell GI.
“For some it’s just not seen as a core part of their offer, but it would be seen as core for the customer – they have to take home insurance with someone and brokers can provide it for them,” he says. “It’s also about doing the right things for your customers, making sure that they have a good quality product that will protect them when they need to make a claim. Ensuring that your customer has good income insurance helps them keep some stability when they lose their income.”
Kevin Paterson, Assurant’s sales and marketing director, believes some brokers have taken the easy option. “Some brokers can be lazy,” he says. “If you look at protection sales compared to general insurance sales the initial commission available is much higher than a typical Accident Sickness and Unemployment policy. “GI commission levels are lower so many brokers don’t see a significant return on their time. But the payback is further down the line as it pays the same commission every year the policy renews. This enhances the embedded value of the business. Some brokers get this, others don’t.”
In contrast Berkeley Alexander claims to have witnessed a significant increase in volumes of business over the past two years as brokers mine their client databanks. “Most are not waiting until the fixed mortgage deal expires, they are using the opportunity to cross sell GI to go back to an existing client and stay in touch,”
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60