chris knight leAseguArd
Agents may be FSA directly authorised, Introducer Appointed Representatives, Introducers or FAS exempt.”
The perennial issue for letting agents
is that many people ‘become’ landlords because they are letting their own home while they are abroad, or until they can sell it, or while an inheritance issue is resolved and they don’t view the operation as a business. They don’t realise that their normal household insurances may be void if they let the property, or, if the insurances are allowed to remain in place, they may not provide the same level of cover if a tenant is in residence. Failing to advise the insurer that a property is tenanted could result in a claim being rejected – a nasty surprise when you are away from home.
Advising cAution However, given that the landlord understands the need for insurances, what should you be advising him to buy? Well, the first thing to note is that you are not allowed to advise anyone on purchasing insurance unless you are authorised by the FSA or you are regulated by an FSA authorised insurance broker. Your chosen insurance provider will be giving the ‘advice’ element of the transaction through their information packs and most insurers offer support and training to ensure that the letting agents understand the rules on selling insurances. David Scutt, National Sales Manager for
Endsleigh says that they, in common with most specialist lettings insurers, operate an introducer appointed representative model which means that they handle all of the regulatory, compliance issues in house. “We understand that our letting agent partners would rather spend money on growing their core business so we take as much of this away as possible.” Homelet’s Andy Wynne-Jones, Head of
Underwriting and Product Development says, “We have a highly skilled Compliance department who’re on hand to assist our customers and ensure that they’re trained and confident with the latest legislation. They provide a point of contact and even carry out regular visits.”
This is clearly a necessary support as
Bryn Cole, MD of Paragon Advance, says that they find that letting agents still ‘feel restricted’ when considering insurance sales, but there are some agents who take their insurance sales further and become FSA authorised in their own right. Michael Portman, MD of Let Insurance Services (LIS) says that they have clients who are FSA authorised so LIS offers agents different levels of service depending on their level of involvement with their clients’ insurances. Chris Knight, General Manager at
Leaseguard, explained that there are several levels and exemptions. “Agents can be (A) directly authorised by the FSA, (B) exempt from the FSA regulations i.e. Members of the Law Society and RICS where the FSA have authorised their exemption, or (C) Introducer Appointed Representatives and (D) Introducers.” Nigel Atkinson – National Business
Development Manager at PropertyRisks says that there FSA ‘level’ depends on the agent’s internal resources and infrastructure. “Some have chosen to become Appointed Representatives (ARs) with PropertyRisks as their principal. We agree with these agents a suitable level of monitoring and control in order to maximise the protection for both agent and their client.” Some insurers also offer agents the
option of the ‘white label’ product. It may be considered vanity, it may be viewed as just a way of making your agency appear
larger, more established, more professional, but some agents like it. Insurers offering this include LIS, Homelet and PropertyRisks, while Endsleigh says they do offer this facility to Appointed Representatives but “whereas an appointed representative (white label) approach is one which we are able to offer, our experience is that we can achieve comparable conversion rates and, in turn, income for our agents far more effectively through an introducer appointed representative approach. We employ entire teams who specialise in converting insurance opportunities
compliantly. We like to think that if we concentrate on doing what we do best, our partners have more time to focus on doing what they do best which is growing their businesses.” They have a point, insurance is a very
complex business and the goalposts seem to change on a regular basis, perhaps for many agents it is simpler to be a ‘reseller’. It is all dependent on the size of the agency and its strategies.
FinAnciAl FActs Is it worth the effort? Even in these informed times, many landlords and tenants do not take out insurance policies; is it worth the effort to persuade them if all you get is hassle and a few pennies in commission? All the insurance providers we spoke to
pay sensible commissions on the sale of their policies by agents. They also endeavour to make life as simple as
There are no major exclusions to our policies – it’s specialist cover with lots of added benefits.”
BrYn cole PArAgon AdvAnce
PROPERTYdrum SEPTEMBER 2010 57
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