Customers will keep their protection policies in place if the benefits are sold correctly to them in the first place – even with an significant interest rate hike.
Pam Brown, owner of Pam Brown Mortgages, was commenting on the Bank of England’s 0.5% hike in interest rates to 1.75% – the largest increase in 26 years.
Brown told Health & Protection that the firm was seeing strong retention numbers and had not had a rush of customers looking to cancel or postpone their cover.
She noted that 99.1% of protection policies that have been taken out with the firm are staying on.
“If you sell it right or you talk about the benefits properly then it comes off [the books] less,” Brown said.
And she revealed that her daughter Nina, the firm’s protection specialist, had just had a “cracking” week.
But she was aware of the wider economic impact of the hike and the Bank of England’s warning about an impending recession.
Brown said: “I don’t know if this [rate rise] helps or doesn’t help. We’ll see next year if we do go into recession what happens with the clawbacks.
“At the moment we’re seeing no difference whatsoever – absolutely nothing, period.”
However, data from reinsurer GenRe, has revealed the UK protection market dropped by 10.2% in the first quarter of 2022 with new business falling to £185m on an annual premium equivalent (APE) basis from £206m in the same period last year.
But while Brown conceded the firm did not have a good month last month, she added customers were still intent on moving home.
“I think everyone was struggling with what is happening but I think people are just at the moment are thinking, ‘okay the prices are going up but we still want to move’. Whether that changes in six months, your guess is as good as mine.”