The past 12 months have come with hard-hitting challenges for many businesses and industries, and the mortgage protection market is no exception.
However, these new challenges have also presented opportunities for us to tackle and overcome and it’s been really encouraging to see how the protection market has shown resilience in the face of tough times.
Due to Covid-19, there has been a renewed interest by the general public in protection insurance and I’m pleased to say that insurers have adapted by reviewing their underwriting in order to provide quality personal protection plans to alleviate client worries.
For the property industry, it has been an extraordinary year. Not only have we continued to operate but we have, in many cases, thrived.
The power of 21st century technology has been relied upon and has delivered, with many people working remotely and still being able to earn a living. As such, demand for property purchases has remained high.
Whether you agree or not with government actions over the past year, one popular policy out of Westminster has been the extension of the stamp duty holiday which has seen a significant stimulus for the mortgage market.
I know of one estate agent reporting a single house having 16 (virtual) visits in just one weekend. No doubt this will be the case nationwide, as prospective buyers rush to buy before the doors potentially close on this extension on 31 March, unless of course the chancellor decides to push this deadline back a few more months, which is possible.
Catalyst
With regards to protection products on the market, the pandemic has most certainly left its mark. In my lifetime, I don’t think there has ever been a more powerful catalyst than Covid-19 for helping clients see the value of what we provide.
This has had a profound impact on the volume of income protection sales. Whilst many insurers have pulled accident, sickness and unemployment insurance from the market, we have been able to present income protection as a fantastic alternative, and a superior cover in many ways.
Case progression
Some of the biggest challenges that have faced us as an industry in 2020 have been on the case progression side.
Advisers were palming their hands on their heads for months when medicals and GP reports were requested, well aware of the timescales involved in getting these arranged, with medical centres and laboratories dedicating their time and resources to treating patients and fighting the virus.
On this note, a special thanks must be made to both nurses and GP surgeries for being able to provide a good service when the odds have been stacked against them.
Income protection has proven to be a reliable product. Most insurers have underwritten their policies to include Covid-19 in their definition of ‘illness’, despite the clear dangers of this virus.
Moreover, the fact that clients have been able to successfully claim and insurers have paid out on Covid-related claims, even though this terrible virus didn’t exist when clients signed their contracts, has been a confidence boost to advisers selling this product.
Protection insurance
We really welcome the renewed interest in protection insurance that the industry has experienced since the outbreak of Covid-19, however there remains a sense of caution on behalf of clients when it comes to settling on the right cover.
One example is those first-time buyers who are referred to us by housebuilders. These buyers are new to the property world and don’t always understand what personal protection is, sometimes confusing it for general or health insurance.
Furthermore, these clients are very wary of ‘being sold to’, and they are keen to get the best deal, frequently quoting off-the-shelf prices from insurance comparison websites.
There is work to be done by the advisory sector in reassuring clients that we are experts with their best interests at heart and we can help them to overcome any hesitations they might have.
Online quotes can be misleading and do not match advised policies in terms of cover amount, range of conditions to claim on, and pay-outs percentages, so we must make sure we continue to relay this information to clients in a compelling way.
Looking ahead
2021 will no doubt pose new challenges to the protection and mortgage market. If we meet them with the same resilience, optimism and diligence with which we met 2020’s challenges, then the mortgage and mortgage protection industry will continue to be the most rewarding industry to work in.
Matt Coulson is director & principal of Heron Financial
