A booming housing market is leading to an increase in protection sales and advisers say it is now easier to have conversations with mortgage customers due to concerns around the pandemic.
But engaging renters with protection is proving a more difficult task and the jury is still out on how the country’s cost of living crisis will affect protection sales in 2022.
Absolutely crazy housing market
David Hollingworth, associate director, communications at L&C Mortgages, notes the pandemic has proven a key contributory factor to the booming housing market and is helping with protection uptake.
“The pandemic generated huge demand in the housing market as we all focused intently on whether our homes really provided what we needed and lockdowns provoked a need for more room whether for a home office or for some outdoor space,” he says.
“The change in ways of working and the broadening of area that people might consider if they have the chance to work remotely and no longer have to contend with a daily commute also played a part in generating significant demand.”
Naomi Greatorex, owner of Heath Protection Solutions, echoed those sentiments, adding that the London-based mortgage business she works with has recruited new brokers and administration staff to cope with increased demand from customers.
“That means their business is growing which in turn means so are protection referrals,” she says.
“If you’ve done the right training with the mortgage advisers you work with and you have a good process in place, one will always lead to the other – so more mortgages always means more protection referrals.
“If you’re saying to every client they meet to have a protection review as part of the process then, we tie that it in with a full review.
“We ask what they get through their employer, what they might have already to make sure that in the mortgage process those clients really understand the debt they’re taking on and what that means – everybody should have that protection review. So yes, it’s busy, very busy.”
Pandemic focused minds on protection
Chris Days, mortgage protection broker at Mortgage Advice Bureau, tells Health & Protection the housing market over the last year has been “absolutely crazy”.
Days says he integrates protection into conversations with clients very early on. “It’s a big part of our process – the fact that we’re not just mortgage brokers, we’re mortgage protection specialists,” he adds.
But the pandemic has also focused minds on the need for taking out protection, he says.
“With everything that’s happened with Covid, especially with furlough, people are realising how things can change very quickly,” he continues.
“Covid has brought that home because a lot of people have been linked with people who have had Covid so I think it’s just emphasised the fact that you do need some protection in place because in the past it’s been something that people don’t like talking about.”
While protection may historically have been a subject customers have been reluctant to talk about, the policies and their add-on services are now certainly up for discussion and proving particularly valuable.
“The additional features of protection policies are really shining in the current climate, where having rapid and easy access to medical advice, GPs, physiotherapy and wellbeing services are proving their worth, given the level of disruption that we’ve had to contend with,” London & Country’s Hollingworth says.
“For example, Royal London launched its LiveSmart app this month to boost its already strong support package of Helping Hand and offers GP 24/7 access, mental health support etc. The uptake of these benefits and therefore the value placed on them has been marked throughout the Covid experience.”
Supporting renters
But not all product innovation is being so actively taken-up as attempts to target renters continue to prove difficult.
“It’s difficult to boost take up of protection with tenants even though this seems a part of the market that is in real need of protection,” Hollingworth continues.
“From our own perspective we are generally dealing with landlords not tenants, so although we feel there is genuine potential for this type of product and are supportive of the aims it is a difficult nut to crack.
“The fact that products are available is of course a positive as more tenants become aware of those products and with more people renting for longer it should be something that will grow.”
Hollingworth notes the products are broadly the same as for mortgage customers but recognise that illness has the same impact in meeting rental payments as it would to meet a mortgage.
And ultimately, decisions over whether mortgage customers can take out protection could depend on the ongoing cost of living crisis, which could be set to worsen due to an upcoming increase in National Insurance this spring.
“There’s clearly insurer awareness and an effort to be inclusive of those customers, but the issue remains that protection is generally an advised sale and there are perhaps fewer natural advice opportunities for renters as things stand,” he adds.
“The rising cost of living places its own pressures on customers and will likely put up some challenges as monthly budgeting becomes more constrained, even though many customers may appreciate the value and importance of protection more.”
Greatorex agrees. “I think the cost of living is increasing – your gas bill’s gone up, your electricity bill’s gone up, the cost of food’s gone up and I think the concern is that people will feel the squeeze,” she says.
“Although it is a vital product to insure your income and yourself and your family, you very much have to pay your gas and your electricity bill. You have to put food on the table.”