"The ace cards of convenience and speed are therefore right back with the adviser and 2022 presents the biggest opportunity for them to reclaim market share."
FR: Why is general insurance strategically important for advisory firms?
Offering home insurance alongside a mortgage transaction is vital as it will be needed for the mortgage agreement, and it protects the consumer’s assets. Advisers are attuned to how their client is progressing in their mortgage journey and holding data such as, ‘mortgage offer received’ or ‘exchange date’ indicates the exact timing of when home insurance is needed. This data is gold dust, yet today we estimate that c.675,000 advised mortgage clients still go outside of the intermediary industry to buy their insurance.
The problem with neglecting to have the GI conversation so many potential customers elsewhere, and allowing them to end up on price comparison websites is twofold. They can unwittingly buy stripped out, poor value products having been attracted by low prices, and advisory firms are essentially feeding other businesses with a lead flow that have an intention to cross sell into more core product areas such as mortgages and protection. I would argue the only reason PCWs have grown in such scale is because advisers give up their clients ‘for free’ to these types of businesses.
In a perfect world, advisory businesses would offer home insurance to every client. By taking the hassle away from clients sourcing insurance themselves, firms would not only better serve the customer, but also secure the future of the relationship by intertwining insurance into the homebuying journey (using their invaluable data) and preventing online businesses purposefully cross selling.
FR: How can advisers provide a more streamlined home-buying experience?
PCWs have taken huge chunks of market share very quickly since their inception in the late 1990s / early 2000s. Their models were adopted nationally by consumers searching for the ‘most competitive’ price for their home insurance, but they have often left quality and value out of the equation.
The very nature of PCWs is to compare dozens of insurer products, and, because of needing to meet the underwriting requirements of all of those insurers, the quote and application process involves answering anything upwards of 50 questions in a longwinded exam for the consumer.
Advisory firms in comparison have the advantage when it comes to that simple, streamlined home insurance application. The intermediary sector has innovated much quicker than PCWs and this use of technology, for example, allows you to get a quote with Uinsure by answering three questions (name, date of birth and postcode), and you can apply in just under a minute. A far cry away from 50 questions!
The ace cards of convenience and speed are therefore right back with the adviser and 2022 presents the biggest opportunity for them to reclaim market share.
FR: What lies ahead for the industry in 2022?
Technology will continue to improve for the benefit of advisers and their clients, well that’s certainly what we’re focussed on.
But importantly, there are some of the biggest regulatory changes we have seen in recent times coming into force in January 2022.
With these changes comes big opportunity for intermediaries as price walking will mean insurers can no longer offer hugely discounted premiums with the intention of unfairly hiking them in years two, three and four of the policy. This practice is another major reason PCWs have proven to be so popular as the lowest first year cost was always artificially extremely competitive.
But as price will no longer be the sole representation of value, Advisers can lead the insurance conversation without the traditional sensitivity on first-year prices and instead use the tools at their disposal to offer their clients a quicker, fairer and more convenient service.
FR: If you could read one headline about the protection market in 2022, what would it be?
Fortunately, I can pick one that actually happened... the ban on price walking! This will lead to a fairer, more transparent, and value-focussed industry.