Changing with Covid-19: Diversification and the New Normal

Rob Evans | Paymentshield
1st September 2020
Rob Evans, Managing Director of Paymentshield
"There is now an acute awareness of risk in the public consciousness, and this is no doubt leading consumers to review their protection products"

For the insurance industry, the Covid-19 pandemic has been, among many things, an education in adaptation.

Rising unemployment and economic hardship have inevitably taken their toll on the housing market, stifling property moves and impacting advisers accordingly. And with the UK economy facing recession for the first time in eleven years, unpredictability is only set to increase.

Learning to diversify portfolios therefore represents a huge opportunity for advisers to successfully confront these new realities while also protecting their business from future financial hardship. There is now an acute awareness of risk in the public consciousness, and this is no doubt leading consumers to review their protection products – from wills, life insurance, mortgage protection, and home insurance.

Indeed, our own research shows that financial anxiety has intensified for many since the crisis began, and with recession looming, it shows no signs of slowing down. In a YouGov survey commissioned by Paymentshield in May as part of National Conversation Week, over a third of respondents (38%) admitted to an increase in financial worries since the pandemic, with nearly a quarter of people (24%) also avoiding discussions about finances with loved ones for fear of causing worry or stress. Advisers are in a position to alleviate these concerns and should feel encouraged to initiate dialogue with clients and take a holistic approach to their financial needs, including offering wide-ranging policy reviews on remortgage, product transfer, and equity release.

Refinancing is arguably more attractive now than ever before. Early into lockdown, at the same time that mortgage applications declined (only 9,300 new loans were approved in May), remortgage applications registered a 110% year-on-year increase. Many industry experts believe that the recent suspension of stamp duty will revitalise the property sector, but focusing on these remortgage and product transfer markets will serve advisers well in the meantime. It is also worthwhile establishing these habits for the long term to build a recurring revenue stream that will help advisers navigate future uncertainty.

One way to do this is by diversifying into general insurance (GI) sales. At Paymentshield, we appreciate that the GI arena may be unfamiliar to many advisers – indeed, our research earlier this year reveals that 47% of advisers admit to missing opportunities to sell GI. To boost advisers’ confidence in this respect, we launched several initiatives with which they can approach customers, including a 22% discount for remortgage, product transfer, and equity release clients, as well as home insurance with the option of a three-month payment holiday.

The uncertainty we face and the attendant impulse to protect existing assets is putting insurance centre stage and therefore presents a unique opportunity for advisers who adapt their practices. In what has been an anxiety-inducing time for many, insurance policies offer welcome stability and peace of mind. Proactively reaching out to existing clients to help with their insurance needs – through financial review, for example – will also enable advisers to rekindle conversations with their clients and ultimately, to convert these conversations into sales.

It’s also worth flagging the profound effect Covid-19 has had on our professional habits: remote working, in one capacity or another, is here to stay. And with more time spent at home, accidental damage grows more likely and the risk profiles of clients correspondingly increase. This means conversations between advisers and clients are at this time especially important.

Our recent series of both live and on-demand webinars were devised to support those conversations by targeting the soft skills needed to incorporate GI into remortgage sales. Developed to inspire new ways of thinking in advisers, the series provides crucial support for maximising this latest opportunity, and can even contribute to advisers’ 15-hour CPD requirement. Following the success of our webinars, Paymentshield are also launching a live virtual “Changing World” conference on 16th September which brings together industry experts, GI insight sessions, and networking opportunities. Designed to be as interactive as possible, the event aims to create a community of support that helps advisers to tackle present challenges in the mortgage industry.

There are, of course, diversification strategies beyond using remortgage applications which advisers can employ to thrive in the current environment. The increasing consumer support for small business and shopping local, for example, should not be overlooked. Lessons can be learned from the government’s Shop Local Week and the American Express Shop Small campaign: although both are predominately hospitality and retail-led initiatives, financial advisers can capitalise on the growing sentiment towards supporting local firms by using local marketing channels and asserting their reputation locally as a trusted adviser.

So, even though new business is currently in short supply, conversations between advisers and clients are by no means rendered null and void. Diversifying into GI sales proved a successful strategy for advisers during the 2008 recession. With an equally uncertain property market in play, it seems that advisers must demonstrate a similar kind of flexibility today if they are to navigate this albeit eerily familiar, new normal.

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