November 2022 Roadshows – Register Now!

Hello and welcome to this weeks protection update.

Yesterday (Thursday 3^rd November) saw the latest protection Viewpoint report published by the AMI (the association of mortgage intermediaries).

I’ve been talking about this on our November roadshows this week in Cwmbran and London.  (Obviously, don’t forget to register for Huddersfield or Birmingham which are happening next week.)

These reports are very interesting because they survey thousands of customers (some of which have had their mortgage recently arranged by a mortgage broker) and their responses give you a real insight about their perceptions of advisers, advice and our industry as a whole.

Now what they say is sometimes good and sometimes quite damming of our industry, but knowing this can really help us to do a better job for our customers.

The report also interviews lots of mortgage brokers too and again, collectively, this can be quite helpful to see where the consensus of opinions lies within our industry.

I’m not going to cover everything in this protection update, but rather; my edited highlights.

But if you want to see the full report, I have added a link in the transcript.

So, the first part of the report which caught my eye was where the survey identified members of the public who did not have any protection.  They were asked what the reasons where that they did not have any protection in place.

The biggest reason was “I don’t have a mortgage.”

We know taking out a mortgage is a good reason to take out protection and 38% of people gave that reason.

35% said they could not afford it.  That is a strange one?  Does that mean, if they could afford it, they would take it?  Could we show them a way for it to be affordable?

I don’t have dependent – 21%.  That’s ok for life cover, but what about critical illness cover and income protection.  Looks like there are some people are definitely labouring under some misapprehensions?

People also said it’s a waste of money (17%), I don’t think it will pay out 16%…

Take from that what you will!

Another question which appears on page 9 asked “which of the following is most important to you when deciding on which protection insurance to take” …

The choices were Advice or recommendation from a trusted source, convenience & speed of application, name of the insurer and strength of the brand.

Those all made up the lower percentage of responses.

The top 2 were:

• Price (31%) and
• quality of the product (29%)

that’s what most people said and I think that is interesting because that is how people operate.

We want to pay the most competitive price but we also want value.  If we see value, we will pay for it.  Yes, there is a ceiling to what everyone can afford, but quality is an important thing and remember this question was specifically about protection insurance.

There were some worrying responses about claims pay-outs and whether we trust insurance companies.  More than half of people asked said they do not trust insurance companies or they do not trust them very much.  Definitely some work for the providers to do there.

And advisers were asked what they most value from protection providers.

• 42% said quicker processes and systems.
• 29% said access to underwriters.

Obviously, that’s so we can properly understand the terms that are available to the customer, rather than just doing a quote, sending the application in and hoping for the best.

I think this was a good one for all the providers to be aware of in terms of what the lion’s share of advisers said in response to that question.

And we’ve been talking about income protection recently and the public were asked if you were unable or too ill to work; how much would you receive in statutory sick pay.

• 19% said it would be between £125 and £250 per week.
• 12% said it would be over £250 per week.
• 31% of people said it would be less than £75 per week.

The majority of the general public don’t know what they are entitled to and in and amongst this was the self-employed who virtually all said they expected to get some statutory sick pay (the average figure was £95 per week), when in fact they are not eligible for it at all.

And the last bit I wanted to pull out was a fascinating bit of analysis of why customers bought protection from someone else, not their mortgage broker?

The question read “what was the main reason you bought protection insurance from elsewhere, rather than your mortgage broker or adviser”?

Let’s tackle the straggler answers first. These are the low percentage responses.

I did not think my broker was qualified to sell protection to me?

My broker could not provide any quotes so I went to another company?

I didn’t trust my brokers advice on this?

What’s all that about… they trusted your advice to take the mortgage but not the protection???

Those are tiny amounts of responses but they are in there.

I did not feel I needed advice on this – 8%.

My broker didn’t give me enough choices and options – 8%.  Do we do that?  Do we give our clients alternatives, perhaps based on different levels of budget?

The process was too complicated with my broker – 9%

I wanted to buy it from my insurer that I use for other insurances such as motor and home – 9%.  I guess there is a question to ask why they are buying their home insurance without advice as well?

• I just wanted to get it at a later date? 10%.  I wonder if they ever did?

I could get it cheaper from another broker?  Again, is that the real reason.  Isnt it also about value and quality?  That was 11%

And the top 2 reasons:

• “I could get it cheaper buying it direct from the lender or price comparison service” 14%
• and the top one “I just wanted to focus on arranging my mortgage”.

Hmmm?

Are you coming to the roadshows next week in Huddersfield and Birmingham?

This is part of my business development session where we’re going to look at how we can improve our mortgage process to make it much easier to get protection on the agenda very early into the whole process.

One of the responses there was that clients bought their protection from another adviser.  That hurts?  You arranged the mortgage and did all of that hard work, but they bought protection from someone else.

I just wanted to focus on arranging my mortgage?

Isn’t part of that process to look at the risks associated with taking out a mortgage?

Your home is at risk if you can’t keep up repayments…

Join Bob Scott and myself next week as we’ve got some ideas we want to share with you and of course, if you were with me this week in Cwmbran and London, you’ll know what I’m talking about.

Very simple adjustments to the mortgage process that will help us get the importance of protection on the agenda from an early stage.

So, there is a lot more in this report and I’ve added a link to it in this week’s protection update.

So that’s it from me once again. Have a great weekend everyone and I look forward to seeing some of you next week at our north west and midlands roadshows!