Mortgage advisers missed out on £47.8m in lost commission last year as a result of failing to provide a home insurance quote for every mortgage sale, according to analysis from Paymentshield and UK Finance mortgage data.
Remortgage and product transfers were a huge area of missed opportunity, amounting to £10 million alone in lost commission.
Emma Green, head of sales at Paymentshield, said in a statement: “Having a conversation about home insurance is often not perceived as a priority by advisers, but they are missing out on a huge amount of commission.
“Remortgage and product transfer clients are often overlooked when it comes to a general insurance conversation. We know from our own research that nearly half of advisers (47%) admit to missing opportunities to sell general insurance.
“When it comes to remortgage and product transfer clients this is because of renewal dates not matching, cancellation fees, or simply because clients perceive their existing policy to be meeting their needs. As a result of Covid-19 more consumers are starting to review the protection products they have, from wills, life insurance, mortgage protection and home insurance – so the benefits of reviewing policies for remortgage, product transfer and equity release clients are also clear.”
How general insurance could be the beacon of light at the end of the furlough tunnel
Rob Evans, CEO at Paymentshield offers further insight into other areas mortgage advisers could generate a significant source of income considering the ongoing Covid-19 pandemic.
Evans says: “Many advisers returning to work are having to adjust to the new normal and plan out the roadmap of a return to growth. Advisers are feeling the impact of the unstable property market. Bank of England figures show April’s mortgage approvals for house purchases were the lowest monthly rate since records began in 1993 and an 80% drop from February.
“Approvals for remortgages also fell, although at 34% from April to February the drop was less severe. Whilst the figures do present a drastic reduction in activity, they must be viewed in context of a full market shutdown.
“Many are drawing comparisons between 2008 and the current climate, and there are certainly lessons to be learnt from the approach some advisers took to survive the recession. When new property sales ground to a halt, many advisers switched to selling general insurance as a supplementary way to plug income gaps.
“The advisers that adopted this approach in 2008 emerged stronger from that crisis, and those that kept the habit find themselves in a much stronger position to face this pandemic, with income levels that are much more resilient to the drop off in mortgage transactions.
“Advisers are focussing on general insurance through three methods: working their back book, offering existing clients a financial review and utilising remortgage and product transfer applications as an opportunity to discuss general insurance.
“In a YouGov survey conducted with over 2,100 consumers last month and commissioned by Paymentshield, 36% of respondents said that lockdown has had a negative impact on their personal finances.
“In this time of economic uncertainty, advisers have a real opportunity to positively engage with clients and initiate financial conversations. People looking to cut costs may turn to comparison sites, which could lead to negative financial consequences if they opt for poorer quality financial products that are not fit for their needs. General insurance provides a big opportunity for brokers to create a sustained and resilient income stream and return to growth more quickly, but advisers must take a proactive stance and have those conversations with their clients.”