ABACUS Exposed October 2022

A message from Richard Burgess

Welcome to this issue of ABACUS Exposed. My thanks to Mark Harrington of Iinsure 365 for agreeing to be our spotlight Broker for this issue.

With the cost of living rising for us all our message to our Brokers is loud and clear – please work with your customer to ensure their property is insured correctly. We have included information on this subject within this newsletter and would urge you to continue the great work you are doing in protecting your customers. Index Linking is likely to reach 20% in the coming months and this is necessary to protect your customers investment and avoid under insurance and the issues this brings with it.

The Consumer Duty is fast approaching, no doubt you are working on this to ensure that you continue to deliver good outcomes for your retail customers. Our work on this has been completed and the internal reviews we undertook have been positive for the business. With the Fair Value, Product Governance and Value Measures reporting all now embedded it has certainly been a busy time for us all with Regulatory changes.

We have continued to work hard to deliver high levels of service to you and I would like to thank all of you that took the time to complete our Annual Broker Survey. We are currently collating the results and will share these with you shortly.

Thank you all for your continued support of ABACUS and please do contact us if we can help you in anyway.

Richard Burgess ACIEH,

Director

News round up

Property matters in the UK are often in the headlines. Whether you are a homeowner or a landlord, it helps to stay abreast of the news and keep one step ahead of those changes that may affect your current – or planned – investments.

In our news round-up, we take a brief look behind just some of those headlines.

New builds far more expensive for landlords than existing homes

If you are looking to invest in buy to let property, your choice is between the purchase of a new-build home or an existing one. Recent statistics suggest that you’ll find it far more expensive to invest in the former.

A story in Landlord Today earlier this year, for instance, revealed that the average price of a typical new build property rose by 28% in the 12 months to August 2022 – from £330,662 to £422,414. The price of the existing average home during that period has increased by only 8% – to its current average of £272,851.

In some parts of the country, that gap between new-build and existing house prices is even wider. In Wales, for example, newly built homes have increased in price by 34% in the same period whereas for existing homes it has been just 11%.

In Scotland, too, increases of 29% in newly built homes have been matched by an average increase of just 7% for existing property.

If you’re a landlord, you’ve almost certainly heard of the Minimum Energy Efficiency Standards (MEES) which came into force on the 1st of April 2018 and which meant that you could not let any property unless it had gained a minimum E-rated Energy Performance Certificate (EPC).

The National Residential Landlords Association (NRLA) reminded its members of the discussions at government level about tightening MEES still further – so that any property let in the private rented sector must have an EPC of C or above.

Although no firm decisions have yet been taken, there is talk of those tighter rules coming into effect for new tenancies from April 2025 and extended to all existing lettings three years later – when landlords will also be expected to foot bills of up to £10,000 for energyefficiency improvement works.

EV chargepoint grant for landlords, RTM’s and RMC’s

In a press release on the 4th of August, the government’s Office for Zero-Emission Vehicles (OZEV) published guidance for landlords (as well as residents’ management companies and right to manage companies) wanting to apply for grants for the installation of chargepoints for electric vehicles (EVs) in properties in the private rented sector.

Grants are available to cover up to 75% of the cost of installing chargepoints – including those with more than one outlet – and amount to £350 for each grant.

Landlords can apply for up to 200 grants each year for residential lettings and up to 100 grants a year for commercial properties.

EPC rules for rented property: what you need to know

A story in the Daily Mail gave hope to beleaguered owners of leasehold flats which they have been unable to sell because mortgage lenders would not advance loans on properties with outstanding external cladding fire hazards.

The reason for some degree of relief is that six of the UK’s leading mortgage lenders have now agreed to consider granting mortgages in those cases where the cost of the necessary remedial works to dangerous cladding has already been agreed either by the government or the developers concerned.

Houses in Multiple Occupation (HMOs) have typically been seen by tenants as the least desirable forms of accommodation and these private rented sector dwellings have attracted more than their fair share of rogue landlords.

A recent article, however, suggested that the image may be changing, and HMOs may gain a better social standing since they are now attracting tenants with professional occupations.

By demanding better facilities – such as more space, bigger rooms, fast broadband connections, and ensuite bathrooms – these tenants are helping to give the concept of “shared living” a more acceptable social face.

HMOs moving upmarket as more professionals embrace “shared living”

Some of Britain’s biggest mortgage lenders confirm they will lend on cladding-hit flats in certain circumstances

Benefits of setting up an affiliate programme in your business

An affiliate programme is simply a mechanism where one party - an affiliate - is paid for referring traffic or sales to a merchant (in this case you).

Why set one up?

In this article, we examine why insurance brokers should consider adding an affiliate programme to their marketing strategy. Firstly, let’s take a look at the numbers…

Stats

There are a large number of stats on this market. Here are a few highlights…

According to Practical eCommerce, 86% of brands and 84% of publishers (affiliates) leverage affiliate marketing.

In the UK, affiliate marketing spend in 2017 was £554 million. This spend generated £8.9 billion in sales – which means that for every £1 spent on affiliate marketing, it returned £16.

So, the stats help give you a flavour of the sales potential in affiliate marketing, but what other benefits should you take into consideration.

A warning!

We recommend that new businesses don’t use an affiliate programme until they understand site conversion levels and how well their site performs.

Admittedly, this can only take a few months’ of PPC spend to figure out, but one thing to remember is you can’t launch a new business out of the gate without understanding how well your site performs.

With that out of the way, let’s look at other benefits.

Risk / Reward

This can be a low-risk channel depending on how you set up your commission structure and payment terms — only paying the affiliate when you have been paid by the customer – i.e. on a cost-per-sale basis. This is not like any other marketing channel in that respect.

Yes, you will have to be mindful of clawbacks, etc., but these can be factored

into your structure and terms. You can also set up your programme on a cost per lead, cost per action or cost per click

Increase traffic diversity

Having an affiliate programme means you can attract affiliates with different traffic sources. So, you could have high trafficked blogs, other brands, email affiliates, social media platforms promoting your business. With various traffic sources, you are protecting your business from the potential impact in losing one traffic source. An affiliate programme can act like a traffic insurance policy.

Bringing skills into your business on a cost per sale basis

As we discussed above you can - depending on your setup - bring in affiliates that are skilled at driving traffic in particular ways. For a small business, this can be a godsend to suddenly have affiliates take care of PPC, or social, or email, or even content marketing, if these are not your strong point. And paying them on a cost per sale basis.

Bonus benefits – brand building

Another benefit for a business running an affiliate programme that gets overlooked is an increase in brand awareness. Having your logos and product information across multiple sites gives you awareness. This can lead to more direct traffic for search engines and more potential type-in traffic.

What can you do with a programme?

We have shared some benefits of running a programme, let’s take a quick look at what we can do with one to benefit your business.

Now clearly you can drive sales, but if you don’t have a retail site or sites that converts online then you might need to look at other options or combination of options. You could look to offer:

l A cost per lead programme – pay for email enquiries or leads

l A cost per call programme – yes, get that phone ringing

l A cost per action – which could be a newsletter signup or lead magnet download

l A cost per app install and activation

Or, running a combination of all these things is a great way to maximize the effectiveness of your affiliate programme.

How to set an affiliate programme up

There are literally books written on this subject. But for this short article, there are two main ways…

l In-house - you build an affiliate tracking platform for your business, or you buy an off the shelf package to manage your affiliate programme. All you need then is to go out and get affiliates.

l Affiliate Network - you sign up to an affiliate network that has all the tracking software already running and also has affiliates all ready and waiting to join your programme.

Let’s take a quick look at the pros and cons for each option. Remember this is a quick look, but these tend to always work out as the deciding factors people chose which way to go with setting up their programme.

In-house

Pros: cheaper to set up; gives you full control; builds a private network and with no network fees, this allows to you pay affiliates more.

Cons: no affiliate network, so can take longer to start to see results as you need to recruit affiliates.

Affiliate Network

Pros: built-in affiliate network; access to a wide variety of affiliates; and can see sales quicker.

Cons: higher setup costs and higher pre-sale fees due to network costs.

Summary

Hopefully, you will see that affiliate marketing can be a great way to take your business to the next level. You will need to give some thought to the best way for you to run your programme. But you will see the benefits are worth the investment.

ABACUS Out & About – For Exposed

True to form, Robin has been travelling across the country during July, August, and September. He has been popping in and speaking to some of you and ensuring we are upkeeping our normal standards and providing the best service possible. Here is a quick over-view of what he’s been up to over the last three months…

July Miles & Smiles

Number of Brokers Seen – 24

Number of Miles Travelled – 1,134

As the weather started to cool down the heatwave in June, Robin’s work was only just beginning to heat up. His highlight for the month was a bout of clay pigeon shooting with Anthony Nash from Blink and a delightful group of brokers, in the beautiful city of Exeter.

August Miles & Smiles

Number of Brokers Seen – 27

Number of Miles Travelled – 1,432

After celebrating the English women’s football team’s European Championship win on the 31st July, Robin continued the football theme into August with a visit to Sopwell House, famous for hosting members of influential football teams, he was joined by Zoe and Steve our friends from BLINK.

September Miles & Smiles

Number of Brokers Seen – 26

Number of Miles Travelled – 3,845 (including flight to Belfast)

As the leaves begun their decent from the trees Robin was busy pulling on his lucky socks that he hoped would bring him good fortune as we rounded up some of our team and a lovely group of brokers to spend a day at Warwick Racecourse. The day itself was beautifully sunny, and there were plenty of winning bets placed. The box gave all guests a wonderful view of the track and the horses, and some even got to stand very close to the jumps for race number four, which offered spectacular views of the horses making tremendous leaps over the fences. The day was thoroughly enjoyed by all.

We are ready and waiting

If you would like Robin to hold a meeting with you (be that in person or virtual) to discuss your agency with ABACUS, please let us know. Email us at agency@sabacus.co.uk or call us on 01702 606 312.

Product Exposed

Unoccupied residential property insurance (including property undergoing works)

At ABACUS, we are committed to our broker members by offering what we believe are desirable, cost-effective products that provide market-leading benefits for your customers. This time we take a look at our unoccupied residential property insurance (including property undergoing works)

Who is the product for?

Our vacant scheme works on the definition ‘Any building or part of a building or flat which is empty &/ or disused &/or unfurnished &/or untenanted &/or where there is no lease in active use’.

Unoccupied properties undergoing works

Our unoccupied property insurance (including properties undergoing works) product is also suitable for residential properties being renovated - no matter whether they are to be let or owneroccupied after the works have been completed.

Three levels of cover available + added value benefits We have three levels of protection available, meaning you can offer your clients a choice of cover to suit their own unique requirements.

Key features of our unoccupied residential property insurance (including property undergoing works

Plus, some of the key features of our unoccupied residential property owner’s product include benefits not always offered as standard by some other unoccupied property insurance/property undergoing works insurance providers such as:

l subsidence (all levels)

l property owner’s liability up to £5m (all levels)

l malicious damage (levels 2 and 3) l escape of water (levels 2 and 3). these are typically all included as standard (depending on the level of cover chosen – policy limits and riskbased restrictions also apply).

Plus

l ability to switch the policy to an occupied let and the ability to cater for owner moving in up to renewal’ mid-term (available for 12-month policies only).

l easy to get a quote and buy online.

l for every quotation request you submit we will provide you with a quotation for each level of cover available.

l flexible cover options including short term policies of 3, 6 and 12 months.

l we can cover most unoccupied properties undergoing works including redecoration, redevelopment, restoration, extensions, renovations etc.

l we have flexible limits to the value of the works being undertaken.

What about exclusions?

The policy excludes damage caused by the Contractor (which should be covered under the Contractor’s own insurance).

Where structural works are taking place, no cover is in force for any part of the building that is either being constructed or worked upon.

Why ABACUS unoccupied residential property owners insurance (including properties undergoing works)?

We are proud of our unoccupied residential property owner’s insurance (including properties undergoing works) as not only does it offer, in our opinion, fantastic cover and great value for your customers, but it provides you - our brokers - many benefits too:

l up to 25% commission.

l immediate online access to our panel of insurers - offering a variety of cover options for your customers.

l simply complete your quotation online in the usual way and you will receive your quote for all three levels of cover immediately. Or, if it “refers”, we will come back to you quickly with our terms.

l cost-effective, flexible cover to meet your customers’ own unique needs.

l market-leading product - our policies cover all the standard risks associated with unoccupied insurance including many elements of protection which some unoccupied property insurance policies from other providers exclude.

l policy documentation available immediately online.

l help and support readily available from our Agency & Marketing team on 01702 606 312.

Unoccupied property

FAQs

The latest figures reveal that there are 238,000 long-term empty homes in England alone –meaning there are potential opportunities for providing your clients with unoccupied property insurance cover.

Here are some frequently asked questions (FAQs) your customers may ask about the product …

What is unoccupied property?

Unoccupied property is pretty much just what it says – property that is unoccupied, or in other words, empty or vacant, with no one living there.

Insurers have particular concerns about unoccupied property:

l it tends to attract vandals, squatters or even arsonists; and l anything in need of repair or maintenance can turn into an emergency in an unoccupied property because there is no one there to spot the need for action.

For that reason, insurers typically restrict the extent of cover for your home or any buy to let accommodation if it has been unoccupied for longer than 30 to 45 consecutive days – the exact time varying from one insurer to another. If you fail to get appropriate unoccupied property insurance and rely solely on your home or landlord insurance when the property is empty, the policy may revert to what is frequently termed basic FLEA cover –standing for cover against Fire, Lightning, Earthquake, and Aircraft impacts. In other cases, the cover may lapse completely.

To keep the level of protection your vacant property continues to need, you must therefore arrange specialist, standalone unoccupied property insurance.

What does unoccupied property insurance cover?

Unoccupied property insurance is designed to step in and cover everything that would have been protected by regular home insurance or landlord’s buy to let insurance before the premises became empty and unoccupied.

Unoccupied property insurance stands on its own as a distinct and separate piece of insurance for as long as you need the protection for a property that is unoccupied.

We offer three levels of cover for you to choose from, so you can select the most appropriate protection for your property.

The cover is also flexible. Unlike most other types of general insurance, you can buy unoccupied property insurance for periods of less than a full 12 months. If you expect the property to remain unoccupied for just six months, say, you can arrange unoccupied property insurance to cover those six months alone. Then, if you need to extend or reduce the period of cover, you can.

If my property is furnished, but no one is living there, does that count as an empty property?

As far as insurers are concerned, it doesn’t matter whether or not your property is furnished – if no one has been living there for longer than 30 to 45 consecutive days and nights it is unoccupied.

Indeed, if the empty property is furnished you might have an even greater need for unoccupied property insurance because you stand to suffer a bigger financial loss if the contents are stolen, lost, or damaged.

I am working away from home for several weeks – do I need special home insurance?

The insurer has no interest in why your home is unoccupied – only the fact that it is.

It might be that you are working away from home for longer than a month or

so; it could be that you have taken an extended holiday abroad. You might have the builders in to do some alterations or build an extension and have moved out of your house or let property while the work is in progress.

If you are the landlord of buy to let property, there might be a longer than usual interval between one set of tenants moving out and the new ones moving in –while the property remains unoccupied in the meantime.

I have an empty property that is going through Probate. What insurance do I need?

When a property is subject to probate, it is by no means unusual for it to stay empty and unoccupied until that legal process is finished – and this can take as long as 12 months or so.

You need to make sure that the executors – who are solely responsible for managing the estate of the deceased during probate – have arranged suitable unoccupied property insurance to safeguard the premises and their contents against any loss or damage.

Is there anything I need to do when I have unoccupied property insurance?

Even with unoccupied property insurance in place, you still have a responsibility for staying on top of your empty property by mitigating any risks.

This might mean arranging regular, logged visits and inspections of the property. Depending on the time of year, you may be required to keep the heating at a certain temperature to stop frozen pipes, and so on.

Summary

Ensuring your home, holiday home, probate property or let property is properly protected while it is empty is key. Speak to us today to see how we can help.

Meet The Team

Nick Dawson – Claims Manager

1. What is your role within ABACUS? I’m the Claims Manager

2. What is your role within ABACUS? |

Myself and my team are here to help you, our brokers, in the event that any issues occur throughout the lifespan of a claim. We log all claims that are reported to insurers and make sure that our records fall in line with insurers so that the correct terms are applied to policies when renewable if applicable.

3. What do you like about working at ABACUS, and what do you think ABACUS does the best?

Staff are well looked after which is why we have so many longstanding members of staff. An example of this would be the COVID lockdowns and the way in which it was handled by Richard Burgess which enabled us to continue to thrive during difficult times. We know that if we have any issues that need to be discussed they can be as we have fantastic support systems in place.

4. What are the values that drive you?

I truly believe in TCF as this is a philosophy that we should all take into everyday life. Treating others as you wish to be treated yourself would make the world a better place.

5. What do you enjoy doing when you are not working?

I like watching football. Unfortunately, my playing days are behind me now. I follow Tottenham. I work out when I can lifting weights. Having two young kids I enjoy doing days out with them. When I can socialise with friends, I like to have more drinks than I should, likely due to me making up for lost time!

6. Who inspires you?

My kids. The joy they have brought to me is unmatched.

7. What is something you are proud of?

Passing my cycle proficiency test when I was 11! I am joking of course! I am proud of my team because I know that when a surge event hits, we will work together to make sure that all is in order again as quickly as possible. An example being Storm Eunice & Franklin when record numbers of claims were reported.

8. What is your most-used productivity hack?

My colleagues would describe me as knowledgeable, approachable, and proactive.

9. What three items would you take with you to a deserted island?

A hammock because sleeping off the ground is essential, a football (my very own Wilson) and most importantly a picture of my wife and kids.

10. Tell us about a memorable moment with ABACUS

At Christmas some the staff had taken some time off to have some Christmas drinks and had set each other tasks and challenges along the way. Some memorable moments include, an elf who sang feed the world in the high street and partaking in a space hopper race too!

Protecting Your PropertyUnderinsurance

Guidance on property rebuild costs and valuations

As a property owner it is crucial to ensure that your assets including buildings, contents and rental income are adequately insured. Taking buildings insurance as an example, your sum insured should reflect the cost to totally rebuild your home and this would include not just the materials but professional fees too such as architects and surveyors.

Why it’s important to get your sums right

The main reason for getting your sums insured right is because of the possibility of underinsurance. Most insurance policies will have an underinsurance clause called ‘average’. What this means is that if you make a claim and your sums insured are too low, the amount you are paid can be proportionally reduced.

Example of a claim impacted by ‘average’ due to underinsurance

A medium sized property built of brick with a pitched tiled roof has a buildings sum insured of £450,000.

A storm hits and the ground floor is flooded causing £80,000 worth of damage to the property.

The claim investigation assessed that the true rebuild cost of the property was £600,000. This figure was based on costs including the rebuild, demolition, pathways, professional fees, garden fencing and statutory services.

The property was underinsured by 25%

The ‘average’ clause proportionally reduces the claim payment in line with the percentage of underinsurance.

The claim was for £80,000 so the payment is reduced by 25% to £60,000. The difference will need to be met by the policyholder to complete the repairs.

Why you might be underinsured

The impact of Covid lockdowns causing the slowing of material production with increase demand, and delays of EU imports due to Brexit have seen costs of materials and labour increase significantly in the last 12 to 18 months.

The Building Cost Information Service (BCIS) general building cost Index indicates a rise of

10.2% in September 2021 compared to the same period one year ago. The BCIS Materials Cost Index represents the largest contribution to this increase, with the overall cost of materials in the index rising approximately 19.7% during this period.1

BCIS commented in 2021 on how this increase translates:

“The cost of materials to construct a three-bedroom, semi-detached house has increased by 14% or around £7,300 between January and September.

It is expected to grow by further 1% or £600 by the end of this year.”2

Looking at supply, the Construction Leadership Council reports that:

“…as in previous statements supply challenges continue…”

With regards to one building material, they state that:

“The high level of demand means that a shortfall in the domestic production of bricks, which is already at full capacity, will continue throughout 2022.”3

Increasing costs alongside rising demand and delays of imports may mean you could be underinsured.

Review your sums insured

It is good practice to review sums insured with your insurance advisor at least annually when your insurance policy falls due for renewal, but you should also ensure you are aware of external factors that could impact costs outside of your renewal.

To check your sums insured, you can get your property professionally assessed by a RICS qualified surveyor or using a rebuild calculator.

Here are some useful links:

RICS

Rebuild calculator: https://bcis.co.uk/product/bcisrebuild-online/

ABi

Guide to calculating your rebuild costs: https://www.abi.org.uk/ products-and-issues/choosingthe-right-insurance/homeinsurance/buildings-insurance/ calculating-your-rebuild-cost/

Index Linking

Whilst Index Linking has been applied to your Policy at renewal at the current rate (please refer to your insurance adviser to confirm the % applied) this increase only protects you if your original sums insured were accurate.

Disclaimer

Broker Spotlight

Mark Harrington Iinsure365

1. Tell us a bit about your brokerage, and the origins of the company. Iinsure 365 has been built over the last 20 plus years on the ethos of customer service, we are definitely not an old-fashioned broker as we work in the forever fast paced world, but we do have an old-fashioned attitude when it comes to our customers and their satisfaction is everything to us.

2. What makes your brokerage unique? You will get the same level of service from every member of the team and every year.

3. You have worked with your business partner for some time, how would you describe your professional relationship?

Myself, Mark Harrington and my business partner, Charlotte Skinner, have both been directors working with each other for more than 25 years, but you couldn’t get two more different people. That is why it works.

4. What, in your opinion, is the biggest reason you continue to work with us here at ABACUS?

We work with ABACUS because they have just been fantastic from day one. We like the direct approach that if they can do it, they do.

5. Your main office is based near Brighton… What is your favourite thing about this location? And if someone was going on holiday to Brighton, what would you recommend they go and see or do first?

Our office is based in Hove a part of Brighton which is an absolute jewel on the seafront. You can get everything here from rolling hills, to beautiful seafronts, to fantastic bars and restaurants. It is as cosmopolitan as it gets.

6. Fun fact: the term ‘broker’ originates from the French ‘brocheor’ which meant ‘wine retailer’ which came from the verb ‘brochier’ which meant ‘to broach (a keg)’. As brokers yourselves, what do you prefer, beer or wine? Beer or Wine? Charlotte would probably be wine; I would probably be both!

7. What is your go-to holiday destination?

Anywhere the phone doesn’t work!

8. During your collective years working in the insurance industry, what is the best piece of advice you’ve received?

Always be honest and truthful, if you can’t do it say so.

9. If you had to choose an animal to represent your brokerage, what animal would you choose and why?

A cheetah, whilst we are fast, we still have a soft cuddly side.

10. Do you have any highlights from any day you’ve spent out with ABACUS?

The days we have had out with ABACUS have been fantastic there is too many highs to mention it is always a fantastic experience.

Agency & Marketing Are Here To Help!

Our Agency & Marketing team are here to help you with all Agency queries!

If you would like to discuss your ABACUS agency over many of the video platforms, or via the telephone, Robin & Jecelda are available to speak to you on 01702 606 312, or email us at agency@sabacus.co.uk.

We look forward to hearing from you!