Lisa Martin (LM): Many homeowners have taken the opportunity to improve their homes over the past 18 months. With this in mind, has First2Protect seen a change in demand for property insurance since March 2020, and how can advisers be ensuring they are making clients aware of the cover available?

Mark Batten (MB): We have seen an increase in policy holders notifying us of improvements made to their property, adding extensions and bedrooms, and this is critical to ensure their levels of cover remain adequate.

It’s important that advisers reach out to their clients during this time to ensure they have the right cover. Brokers need to educate customers on whether their policy needs updating for the period the works are being carried out.

Customers often overlook the need to update their policy cover of any material change, which may slow, or even invalidate, a claim due to underinsurance.

Another recent change is the increase in customers working from home, or even moving their business into the property. Most insurers have extended their policy cover and allowed greater flexibility for hybrid working but it’s important for advisers to check policies still meet their customer’s circumstances, as some business equipment may not be covered.

Offering your customer an insurance review is a great opportunity to make contact and be seen to be adding value to the ongoing relationship.

LM: In addition to a range of home improvements, we have also seen an uptick of lender products related to buy-to-let (BTL, as demand increases from landlords looking to take advantage of the stamp duty holiday and increase their portfolios. With an increase in products available, what opportunities or challenges can this present to advisers when discussing insurance with clients?

MB: Not all customers will be aware of the need to have a specific BTL policy rather than standard household cover, particularly if the property is acquired for an Airbnb style short-term holiday let, which require a specific type of cover. If the let property is furnished, this also needs to be reflected in the cover.

Landlords with three or more properties often have individual policies on each property, with different insurers, renewal dates and payment collections. This presents a significant opportunity for advisers to arrange a portfolio policy, which are simple and cost-effective for the landlord.

LM: First2Protect offers a range of insurance for different areas as well as landlord, including home, tenant and specialist. How has demand in each area changed over the past 18 months, and have there been any sector specific challenges?

MB: During the first lockdown we saw a significant reduction in new enquiries as the housing market temporarily closed. We expected customers to spend this time reviewing their finances which would lead to an increase in enquiries, but this wasn’t the case.

Since then, the surge in housing market activity has offered a fantastic opportunity for brokers to offer a full financial review, including insurance, alongside the mortgage and protection.

The combination of Brexit and the pandemic has resulted in inflation and scarcity of supplies, which means insurers have seen claims costs increase putting pressure on loss ratios and ultimately the premiums they can charge.

The profile of claims being made has changed. With more people working at home, we are seeing an increase in ‘accidental damage’ claims and the severity of ‘escape of water’ claims reducing as the cause is quickly spotted.

Again, this shows why it is so important for advisers to explain the full level of cover available at point of sale, and not leaving cover off the policy just to lower the premium. Often customers assume they are covered, only to find out at the point of claim they aren’t. This can have a detrimental impact on the relationship between the adviser and customer.

All of this is happening against a backdrop of huge climatic changes across the planet. The winters are more severe, and the summers are hotter than ever, meaning the risk of major events such as storms, floods and subsidence is ever increasing.

Several insurers have withdrawn products from the market and this is expected to continue. Landlords were impacted when rent guarantee products were removed from the market at the onset of the pandemic. First2Protect relaunched the cover last year but some providers products are still unavailable. With the possibility of increased redundancies in 2022, landlords who are advised to take rent guarantee could be particularly appreciative.

LM: Property insurance, and insurance as a whole, can be a challenging sale for advisers. What do you think needs to change and how can advisers find the process easier?

MB: With more and more services available online, customers expect to access products quickly and conveniently. However, customers mustn’t underestimate the benefit of receiving qualified advice to ensure they have the right levels of cover and fully understand any endorsements on the policy.

When customers use a price comparison website, decision making is often driven by the premium, which is a consideration but shouldn’t be the most important factor. The role of a broker to clearly explain the terminology used, and breakdown any endorsements or exclusions, is essential to ensure the customer secures the right cover for them at the lowest premium.

The insurance industry needs to do more to present information in a clear and transparent way, and an adviser will help the customer understand the value of the product chosen.

Many intermediaries choose to refer the customer into an insurance services provider. This allows them to focus on arranging the mortgage and protection and have confidence that their customer is receiving advice from a qualified insurance adviser and which meets their own service standards.

LM: We have seen the details from the Financial Conduct Authority on the general insurance pricing walking paper, what opportunities do you think it will bring for advisers?

MB: Price walking is where providers set lower prices to entice customers in, and then raise the premium at every renewal, so loyalty is penalised. From 1 January 2022, the new rules will stamp this practice out as premiums must be equal, whether you are a new or renewing customer.

This will bring closer parity with the rates available to advisers. Closer rates combined with the advantage of their advice, should give advisers the competitive edge. If an intermediary has customers who haven’t arranged their insurance through them, this is a great reason to proactively reach out and offer an insurance review.

A lot of intermediaries will only speak to their customers when their fixed term mortgage ends, while insurance offers a great reason to make contact at least annually.

LM: Looking at the next 12 months, what do you see as being key for advisers’ success when talking to their customers about property insurance?

MB: When speaking to a customer about a mortgage or protection, advisers should give equal precedence to their insurance requirements. Insurance is a great reason to contact your customer every year and maintain the relationship. If they decide to take their insurance elsewhere, there is every likelihood that provider will be speaking to them about other products, like protection, and you risk losing business.

Some providers may be tempted to promote more basic policies in order to regain a price advantage, so more than ever, it will be vital for advisers to emphasise the value of receiving advice and obtaining comprehensive cover, such as products with a 5-star Defaqto rating.

Using a panel gives an adviser a wider range of options when recommending a product, ensuring the cover is appropriate and that the premium is competitive. First2Protect have a panel of insurers with familiar brands like AXA and LV, as well as insurers who specialise in non-standard risks.