Insurance Penetration – Are You Protecting Your Clients?

Those who have the highest case sizes tend to correlate with being at the top of the insurance charts. Many brokers that have smaller case sizes around £1,500, find they have to do 2-3x the number of mortgages to earn the same as those at the top of the charts over £3,500 per case.

Top Advisor Levels: 65%+
Minimum Expected Levels: 35%+

These advisors are also in danger of underserving and underinsuring their customers. Promoting a higher insurance penetration is not about forcing as many people as possible to take insurance, it is about doing a comprehensive job and ensuring all your customers have the option of being fully protected and understand the consequences of not being. So how do the top advisors do it?

 

  • Know your products
    Almost all advisors know their mortgage product types inside out, but when it comes to insurances there is a wide range of skill and knowledge on what is available, and what is the right recommendation for a client. Presumably this is because mortgages are simple across providers – a 2 year fixed with Aldermore is structured the same as with Halifax, albeit they may differ in rate and fees – but insurance product offerings vary so much provider to provider.There is only one way around this… Learn. See as many BDMs, product guides, and sales manuals as you can get your hands on. Read insurance blogs, use provider intermediary tools, and use and study the info in systems like CIExpert (if you don’t know what this is then have a look!).
  • Believe in insurance
    Look at your own life – how many people have had serious illnesses, or had long periods off work? Do you have cover? If not why not? You’ll need to handle your own objections before being able to handle others.
  • Professional responsibility
    You are (hopefully, if you’re reading this!) a fully qualified mortgage and protection advisor and have a license to advise, recommend, and arrange various mortgage and insurance products for your customers. It’s very clear to customers why they’re coming to you – they need mortgage help to buy a house.Most however, have no idea what insurance help they need – It’s your responsibility to provide this too, and to make sure that every client you speak to knows what types of cover are available, and why they should have them. Quote for everything, explain everything, and let the customer decide what’s most important to them so you can build them the best recommendation for their needs.

Also, fear the Ambulance Chasers

When the PPI money dries up next year, where do you think the claims companies are heading next? Advised sales for all sorts of finance and insurance products will be under immense scrutiny. You can bet when the media get hold of it and a few claims are settled, advised insurance will be one of them. Don’t fall foul of misquoting or not-quoting your customers.

 

  • Quote upfront and present with the mortgage
    Timing is everything. A lot of brokers make the mistake of sorting the mortgage first, then trying to sell insurance after application, offer, and sometimes even post-completion. How can you predict that the mortgage and insurance will be within the clients’ budget, if you don’t know how much the insurance is when you price the mortgage? How can you pick the appropriate mortgage term? You could argue that the mortgage is wrongly advised if the client wants insurance but this is done afterwards.From a sales perspective, positioning insurance secondary to the mortgage is “up-selling” and pushing 2 sales rather than one – far harder than skiing downhill. Position the total costs for the mortgage and insurances to make sure its “fully protected” as one recommendation.

 

  • Set the benchmark – quote the maxi (Ideal World Recommendations)
    Price is the only objection – If insurance was all free, we’d have loads of it. Quoting the maximum is really the only way to inform the client and help them understand what the options are relative to cost, and from there they can calibrate their decision to identify their preferences.Those at the top of the tables ensure every mortgage is presented as “fully-protected”. This is the mortgage costs as well as the insurance for all applicants,

    • full life & CIC,
    • additional life cover,
    • income protection,
    • GI and anything else

“So, I’ve got you some figures together and there are a few lenders for the mortgage, the best deal is this one @ £600pm over 24 years, with full protection works out at £850pm, which covers all the life & CIC to ensure the mortgage is paid off, family protection to pay out a lump sum for ongoing living costs, income protection to replace earnings if off sick when your employer stops benefit, redundancy cover and home insurance (if appropriate) for you both. How does that sound?”

[then leave silence and let them speak next]

[If OK] Great, I’ll get the applications in. To do so I need…

[If Expensive] OK I completely understand, ideally, we’d all have unlimited cover for everything but of course cost comes into it at some point! Knowing that “£X” is the cost to make sure you are fully protected, how much were you thinking is affordable?… [client responds]… OK great, what I can do is build you a package to get you as much cover as possible for that amount. What is more important to you, the critical illness / income protection / life cover etc.

[then tailor their recommendation around price and preference].

 


Remember, your Professional Responsibility is to ensure each and every client knows what cover they can have, and how much this costs. Most clients when asked upfront for a budget for ‘insurance’ will have no idea, some will just say £30, maybe £50. Until you give them the yardstick which is full cover, how can they make an informed decision on this?

If the benchmark was what they say first, then presenting a £300pm package is not going to be as effective as asking for the budget when they know it’s £300 for full cover. It is then their decision to be underinsured, not yours.

 

**DO NOT ASSUME AFFORDABILITY**

 

Too many brokers quote life only or just life and CIC and not income protection, because they feel it is too expensive. It’s not up to the broker to decide, the customer needs to know the price, and make the call based on their own preferences. Of course, if they want £300pm but don’t have the disposable income to afford it, then you need to advise it’s not appropriate and alter the recommendation accordingly.

 

  • Get them to sign an insurance refusal letter
    For every customer who refuses insurance, have them sign a letter to confirm you have discuss the options with them and they have declined to proceed. This is a powerful way of helping clients understand the importance of it, and a great additional barrier if the ambulance chaser does come knocking!
  • Quote Landlords MORE not less
    A lot of advisors handling BTLs struggle to offer protection to landlords for all sorts of reasons, usually because “it’s not their main residence” so their partner would “just sell it” should the worst happen.The top advisors recognise that landlords usually have their own residential property that likely needs a protection review, but also that their portfolio is a risk to protect.

    Imagine the scenario where Mrs doesn’t work and Mr dies when some of the properties are just in his name – what happens? Lenders can recall the loans, Mrs has to try and refinance or sell several properties, but without a job this is harder, and both are costly. Not fun in any circumstance, let alone when it’s the last thing you want to worry about. Then the ongoing income stops, so then what?

    Those with larger portfolios and individuals of higher net worth, will have further need to consider products to cover inheritance tax, business insurances, and if they own other companies, shareholder and key-man protection etc.