According to the National Housing Federation, England needs 340,000 new homes (including 145,000 affordable homes) per year until 2031.
Due to this desperate need to deliver new homes quickly, modern methods of construction (MMC) have been promoted as a way of working more effectively to achieve more, without using more.
MMC, described as ‘a process to produce more, better quality homes in less time’, centres around the use of mass production off-site construction techniques such as panelised construction, blockwork, or insulated concrete/timber frameworks.
But it’s not only about speed and affordability; MMC also offers the opportunity to drive up environmental performance, efficiency, and sustainability.
All sounds great, but could MMC’s be a potential risk issue for the insurance industry? The answer is yes.
Not all properties built using modern methods of construction would be considered by an insurer as “standard construction”, so it’s vital brokers talk to their clients to build a detailed picture of their property and ensure the right cover is offered.
If in doubt, speak to your GI provider about how to assess the particular risks a property may pose and how to find the right cover at the right price.
New FCA product governance rules
General insurance intermediaries are now required to have updated systems and controls, as well as product governance frameworks, up and running to assess whether insurance products deliver ‘fair value’ for customers.
This FCA rules change marks a significant milestone in the drive towards a more customer-centric industry. However according to consultants KPMG, rather than having an immediate impact for good, it could instead lead to an uneven playing field in insurance, because some insurers are more stringent in their definitions of ‘fair value’ than others.
So, what does this mean for you and your clients? The reality is that whilst the ultimate responsibility to demonstrate ‘fair value’ is on the insurers, brokers have a responsibility to treat customers fairly, and evaluating fair, and even better ‘good’ value, is best practice whenever making recommendations and placing insurance for your clients.
Whilst you cannot influence an insurer’s policy wordings, if you feel that they’re not appropriate for a client’s needs then don’t offer the policy.
For example, don’t just add legal expenses or accidental damage for the sake of it, or because it’s ‘what you always do’ – make sure it meets the client’s needs and demonstrates fair value. The same applies to utilising industry standards such as defaqto five-star products.
Whilst clearly it’s best to use a five-star product when you can, it’s not necessarily providing a fair outcome for every client. I often refer to the example of a first-time buyer with a two up/two down mid terrace and on a limited monthly income.
Do they see value in paying more for a five-star all singing and dancing policy when there may be a two or three-star product that better suits their needs and wallet?
The new FCA rules emphasise what a good broker has always known – ensure you offer the right policy for the client and not simply make all your clients fit the same product.
The onus is on all of us to ensure as an industry we improve customer outcomes and product value, especially in the wake of Covid-19. Let’s all play our part in delivering ‘fair value’.
General insurance is foundation income
Let me ask you a question… do you consider general insurance to be a valuable income stream? If the answer is no, then my next question is – how can I enlighten you?
Is it because you’re nervous or lack understanding about placing insurance? Perhaps you’re worried about permissions? Maybe you simply don’t feel you have the time, or that offering general insurance protection is not worthwhile?
Whatever the reason, following the FCA pricing review, there is a huge opportunity for general insurance income to become foundation income, whether that be in offering standard, non-standard, quirky, high net worth or buy-to-let protection products.
Realise the opportunity by working with a GI provider. We are here to help you with:
· Product, policy and underwriting knowledge; build a successful and sustainable strategy for making general insurance a valuable asset in terms of reputation, relationship building and income.
· Technology, training and support; quote and buy quickly and easily for standard cases with tech-driven solutions, get dedicated support for complicated insurance issues, or introduce/refer a client so you can you do more business, in less time, and with greater financial return.
· Compliance and legal; build a compliant quote process, from fact-find, through product research, quote pack, demands and needs statements, key facts information, and policy documentation.
Your GI provider should be helping you make general insurance part of your foundation income. If they’re not, then maybe it’s time to switch.
