Latest statistics released by the Bank of England and the Financial Conduct Authority (FCA) have shown that 2018 Q2 has seen an increase in mortgage lending activity when compared with the previous quarter. New lending that lenders have agreed to advance in coming months are at their highest level since 2008 Q1 and there has been an increase in the amount of lending to first-time buyers.

However, even though it is widely acknowledged that many consumers have inadequate protection insurance such as life cover, critical illness or income protection, the idea of selling additional insurance products seems to arouse a complicated range of emotions for mortgage advisors.

Whilst many believe that every pound of lending is a pound that needs protecting, selling protection insurance presents challenges for mortgage advisors.

Earlier this year, the Financial Services Consumer Panel (FSCP) consulted with mortgage intermediaries to understand their view on the challenges and reported that advisors often shy away from recommending products such as income protection because the benefits are often hidden by complexity.

In June 2018, The Association of Mortgage Intermediaries (AMI) hosted a meeting for members of the FSCP to meet senior representatives of the mortgage intermediary market. All those the FSCP spoke to had, voluntarily, included a requirement to discuss protection products with mortgage customers within their internal processes as they felt that they were essential and in the best interests of the customers. They had instigated discussions about how customers would cope in the event of the death or serious illness of a wage earner, especially when making such a large commitment such as a mortgage.

However, as it is not a regulatory requirement, attendees acknowledged that was unlikely that this was widely practised. It was reported that since the introduction of the Mortgage Market Review, mortgage advice takes longer, and this left less time for such discussions about customers’ protection needs and that it was possible that many intermediaries were not discussing protection for this reason, which raised concerns about outcomes for consumers.

Though the benefits of protection insurance for mortgage customers are clear - because a fully protected mortgage makes the risk of default much lower, Robert Sinclair, Chief Executive of the AMI explains why protection is such a hard sell, “Persuading consumers that life, critical illness, income protection or payment protection are all worthy of consideration is a big ask, when there are not any tangible benefits other than “peace of mind”. It has always been perverse that people will buy protection for losses related to their belongings, health, teeth, dog and car and not insure the asset that brings in all the money. There is also the “compliance” effect. Why get dragged into complex sales that risk fact find or suitability letter fails when you can just get the client to agree that they don’t want to discuss it. So, the recent initiatives by some larger firms to force a real discussion or ensure that the client is passed to a protection specialist, who will address their genuine needs, or get a signature to say they are happy not to be protected has resonance.”

If you’re a mortgage intermediary and you believe that you have a duty of care to protect families (a mortgage is a huge commitment, and it’s right that customers should be aware of the risks they run), you’ll almost certainly acknowledge that selling protection insurance during or after a lengthy meeting with a client about their mortgage requires practice and patience – but does it have to?

A partnership with a life insurance expert is a viable way to achieve outstanding outcomes for your customers and circumnavigate the complexity; a specialist will unravel the intricacy and offer a practical solution to the challenges that you may face when selling protection insurance – plus a worthwhile partnership will generate you a healthy income, without you having to invest any of your time.

A business such as ours, specialists that deal with protection insurance day in day out, could fill in the gaps in terms of product knowledge, ensure products offered are consistent with your client’s specific demands and needs, expertly complete all the legally required paperwork and we’ll pay you for the introduction!

If you think a partnership could work for your business, contact Rob White rob.white@essentialinsurance.co.uk or leave your details here and we’ll contact you to arrange a meeting.