“PPI not MPPI has had a bad time and frustratingly for us and mortgage brokers and IFAs, it was 99.9% mis- selling through the banks,” he says. “The knock-on effect of that was that anything with PPI in the title, wrongly and unfortunately, attracted a bad rep which is frustrating because right now we’re in a period of time where people need that sort of protection.”
The PPI debacle meant a lot of people either cancelled MPPI, got their money back or don’t want to buy it anymore Johnson reveals. But if they have an accident or got made redundant tomorrow, the vast majority of the UK public would last a couple of months or so on savings.
“The average savings pot in the UK is less than £3,000 so it doesn’t take people long to run out of money,” says Johnson. “The government schemes to protect people against that are actually pretty flimsy if you dig into the detail. Income protection was designed to provide a similar sort of protection to MPPI except to provide a bit more flexibility and to move it away from the taint of PPI.”
In August last year Paymentshield launched IncomeShield - an income protection alternative to an MPPI product.
“Essentially it’s income protection instead of being linked to a loan,” explains Johnson. “MPPI protects against the inability to repay monthly mortgage payments whereas income protection protects up to 80% of your monthly income which you can then spend on anything.” The insured issues are the same, accident, sickness and unemployment. So if you lose your job, you’re off sick or if you have an accident, you can claim for a period of time on various product variations. Simplicity and flexibility is what they’ve aimed for, driven by the understanding that not every client is the same and so not every product should offer the same cover. “Let’s say your income protection
product gives you £1,000 per month; different individuals have different priorities,” Johnson explains. “Will you still be able to run the car?
Without it you can’t run the kids to school and you can’t do your job. Other people might say that what’s important to me is to keep the rent going. Other people might say that they’re off for work for a few months but they’d never want to give up their gym membership because it’s an important thing for them.
“So flexibility is the primary driver rather than paying the mortgage which is quite locked in. It’s not putting much choice into the consumer’s hands if you offer a policy tied to a loan.”
helpIng brokers It’s been said IFAs are traditionally more comfortable having the protection conversation than mortgage brokers, though they’re getting a lot better at it, and Paymentshield is committed to helping brokers improve their protection selling skills. “We’ve got a pretty sizable team of managers with 10 out on the road and another dozen or so internal guys,” says Johnson. “Their job is to go to mortgage brokers, talk about product features and benefits, train them on how to sell a product and go through how the things work on the screen. “It’s quite coal face stuff because we found the principal needs to buy into it as a concept but the people on the desk who do the day job also have to understand why they’re selling it to clients. “We hold workshops, at desk training sessions with small groups in their businesses and we know all the big networks so we often turn up at their regional events and do insurance workshops. Because we’re reliant on them to sell, we put a lot of time and money into helping brokers get better at selling the ancillary products.”
CompeTIng wITh CompArIson sITes In the spirit of supporting intermediaries Johnson has something else up his sleeve for the coming months. Paymentshield plans to launch a panel of insurers to improve the choice advisers have from the firm. “Our household product is underwritten by RSA, it’s been a great deal for the
customer, the product is good and we’ve been strong on de facto ratings. But what’s in the DNA of most mortgage brokers and definitely in the DNA of IFAs is that there’s a need for independent advice and showing choice,” explains Johnson. “We’re trying to help mortgage brokers
and IFAs fight the enemy of comparison sites because it’s easy to get caught up in your own little world of the local competitor being a mortgage broker down the road. In terms of mortgage distribution that’s probably true but for ancillary product sales that’s probably not true.
“The competitors for your household insurance are not arranged through a mortgage broker, it will be a Comparethemarket, a Direct Line or a More Than. If we give you a panel where you get half a dozen different insurers to choose from it gives intermediaries another tool to help wrestle a client away from going home to find their own quote.”
Though Johnson won’t confirm which firms will be on the panel, he does reveal it will be “big name, household insurers”.
DoIng IT DIfferenTly It may not be the glamour of the glitterati on red carpets or F1 cars whizzing around a track at hundreds of miles an hour but Johnson is motivated by his current role and the challenges it offers. “The thing I enjoy most is having to re- invent and re-position Paymentshield to help intermediaries through the current environment,” he says. “In the current climate, everyone is on a bit of a burning platform so people have to do things differently in order to get through. “We all hope the market will pick up again but the stats say we’re not there yet. In a way it’s exciting: the market is not in a good way and we need to be more creative and do things a bit differently.” It’s one way of looking at it. Though it might feel more nerve wracking than exciting to many brokers, in the same way insurance is reassuring, having someone with the dynamism to attack and drive things forward in this industry is heartening. n
mortgage introducer OCTOBER 2011 45
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