"It seems there’s a lack of awareness that mortgage advisers are able, and are arguably best placed, to review their customers' home insurance arrangements."
- Louise Pengelly, proposition director at Paymentshield
We all know that generating good customer outcomes is wired into the way advisers think and operate. After all, a failure to possess this mentality would result in very low repeat business rates.
Furthermore, advisers understand implicitly that a ‘good customer outcome’ extends to emotional and financial health. In a recent Royal London survey, over 60% of advisers said that in the current economic climate, providing reassurance and peace of mind for clients was one of their main roles.
Indeed, peace of mind is paramount when it comes to protecting the home. As such, home insurance is not just a simple financial transaction – it’s also an emotive one. That’s why we believe it’s so important advisers make sure their clients have appropriate insurance in place to protect their homes and belongings, as part of the wraparound support they provide.
However, when it comes to general insurance (GI) conversations, our research has shown that one cohort sometimes gets overlooked: remortgage customers. This can be down to many reasons, including a perception that existing homeowners may not require support with home insurance if they’ve been through the process before. Or simply because the client already has an existing policy in place – even though it may no longer meet their needs.
From the research we conducted via YouGov, of 2139 UK adults, only 9% of homeowners said their adviser offered to review their home insurance at their most recent remortgage. There also seems to be some uncertainty over the scope of support advisers can provide, with just 14% of homeowners saying they thought the mortgage adviser would have the main responsibility for checking their home insurance policy was fit for purpose during a remortgage.
This is not the same as saying only 14% of homeowners would want their adviser to offer a review. On the contrary, it seems there’s a lack of awareness that mortgage advisers are able, and are arguably best placed, to review their customers' home insurance arrangements and provide advice on what cover is right for the client.
These low expectations are despite the same survey revealing consumers do place value in financial advice over ‘do-it-yourself’ approaches. Almost half (46%) of respondents who said they are likely to seek professional financial advice this year said the main reason they’d do so, is because they believe they’d be better off than if they took a DIY approach, for example via self-serve platforms and price comparison sites. Undoubtedly then, it’s safe to assume that a significant proportion of remortgage customers would appreciate the offer of a home insurance review.
Plus, with UK Finance data revealing about 800k fixed rate mortgage deals are due to end in the second half of this year alone, there’s potentially a huge number of homeowners that will be turning to a financial adviser for support between now and the end of the year. Therefore, we’d urge advisers who aren’t already having GI conversations with their remortgage clients to actively get ahead of this opportunity and get into the habit of making sure their clients understand the advice they’re able to provide when it comes to home insurance.
Advisers will also be looking ahead to the Consumer Duty which comes into effect this July. Offering a home insurance review to every single customer could help them to address the Duty’s aims to better consumer understanding and consumer support.
Worryingly, in our YouGov research, we also found that where an adviser did not offer to review a customer’s insurance at remortgage, 64% of those people did it themselves. But that leaves 34% who either didn’t review it or can’t remember whether they did or not, or – even more concerning – 2% saying they didn’t have home insurance at all.
So, is leaving home insurance solely in the hands of the consumer really in the spirit of driving good customer outcomes, as the Consumer Duty intends?
In addition, leaving clients to take a DIY approach can throw up further issues when it comes to consumer understanding. Over one quarter of respondents in the survey (26%) said they wouldn’t understand what a policy covers if they purchased one from a price comparison site.
This is where advisers are an important bridge in making what can be a confusing purchase decision more accessible. It’s crucial that consumers – even ones who may have more experience - can tap into that expertise and ask questions.
Equally, advisers need to be supported when playing this role. They need access to the right training and support so that they can easily explain products, and successfully complete the GI process. Even if the consumer doesn’t subsequently purchase home insurance, at least, in offering a review, advisers can confidently tick every box in their aim to generate good customer outcomes. And while that is always the priority, let’s not forget the fact that it can also generate commission.