General Insurance review

Supporting landlords through the cost-of-living crisis

Geoff Hall

chairman, Berkeley Alexander

As I write, the National Residential Landlords Association (NRLA) is calling for a cost-of-living plan for the private rented sector as both landlords and their tenants face ever-growing costs.

The report by NRLA points to recent official data showing that 69 per cent of private landlords are basic-rate taxpayers, highlighting why they’re not immune to the crisis. While we wait to see whether the government will implement NRLA’s suggestions, there’s an opportunity for advisors to step in and provide valuable advice and protection.

First, for your professional landlords, consider a multi-property policy. These offer the ability to insure an entire portfolio under one policy. This may be a more cost-effective option, and reduces the administration burden for you and your client, as there is one renewal date, one annual review, and one claims line to call in the event of a claim.

Second, my urgent advice to all landlords is to act quickly and secure rent guarantee policies while you still can.

In the current crisis even the most reliable tenants could experience financial difficulties, and therefore the likelihood of rent arrears is higher than ever. Many landlords are also still struggling with the impact of arrears built up during the pandemic. Rent guarantee policies provide valuable protection to cover rental income should tenants be unable to pay. During the pandemic we saw a number of providers withdraw from offering cover to new clients. Whilst the circumstances are very different now, have the conversation with your landlords and speak to your GI provider to secure policies for landlord clients sooner rather than later.

FCA FOCUS ON MULTIOCCUPANCY BUILDINGS INSURANCE

The Financial Conduct Authority (FCA) has raised significant concerns over the way the market operates, and the increasing premiums seen, within the multi-occupancy buildings market (blocks of flats). Rapidly increasing insurance premiums, often due to construction/ cladding concerns, have resulted in significantly increased and sometimes unaffordable costs resting with the flat leaseholders.

It’s an important topic. My view is that property managers are paid a service charge for activities related to the upkeep of buildings, and this includes the placement of insurance. Seeking alternatives when costs are rising seems a reasonable expectation rather than simply sticking with the current provider and passing the cost to the leaseholders.

As advisors you’re well placed to assist property managers in doing the right thing. If you have a good relationship with your GI provider, reviewing the market could possibly help your clients to pay less and keep leaseholders happy.

WHAT IS NON-STANDARD INSURANCE?

Non-standard has traditionally been a catch-all term for insurance needs that fall outside of standard household policies – risks like thatched roofs, listed buildings, underpinned properties, or policyholders with previous criminal convictions.

However, the way we live continues to change, and the nature of risk evolves. Our homes and the relationships we have to them look very different today than they did 50, 10, or even three years ago, and this has had an impact on what non-standard means today. Working from home, for example, is no longer unusual, but rather the norm for a large percentage of the population following the pandemic, and property risks that were previously considered non-standard are increasingly becoming standard, such as non-standard materials and alternative methods of construction.

However, it’s not just the building that creates a non-standard insurance need. We receive weird and wonderful requests from time to time – for instance, we are increasingly seeing clients with highly expensive e-bikes that often still fall outside of standard parameters. These non-standard items are often things that the broker only becomes aware of in conversation. It reinforces the importance of regular contact with clients and getting to know them individually. Non-standard isn’t always just about the chocolate-box thatched listed property or the converted water mill – it’s not just about the structure, but about the individuals who live there, too.

My advice is to be thorough in your conversations with clients. Whilst the “big data” three-question set style quotes currently available in the market have their place, they may not identify more non-standard requirements. You only find out about those sorts of things by talking to customers in more depth. If unsure, speak to you GI provider. They will be able to assist with bespoke quotes for those non-standard or difficult-to-place needs. M I

Capitalising on the biggest remortgage GI opportunity in a decade

Emma Green

director of distribution, Paymentshield

In the past month, mortgage repayments have been thrown into sharp focus for millions of people up and down the country. With the trajectory of interest rates looking like it’s only going up, the remortgage market is experiencing an intense wave of activity – indeed, the cohort considering remortgaging right now extends well beyond those whose mortgages are actually due to mature this year.

Our annual adviser survey consistently shows that remortgages are a big area of missed opportunity when it comes to selling general insurance (GI). In our 2022 survey, over one in five advisers said they don’t discuss GI with remortgage clients at all, with nearly three in five admitting they sometimes miss opportunities to sell GI more generally.

Given the scale of the remortgage market right now, we’d urge advisers to actively get into the habit of having GI conversations with their remortgage clients. Not only couldwthis bring in a reliable additional source of income for advisers at a time when the wider market is in a state of flux, but it also presents them with an opportunity to add value and support their customers at a time when many will appreciate that more holistic service offering.

It’s fair to say that protection products aren’t always top of mind for customers, and years can pass before insurance is even on their radar again. But the fast few years have prompted major lifestyle changes for many, and customers may find that the insurance policy they currently have is no longer suitable for their needs – particularly those who have been on a five-year mortgage term.

The pandemic saw many of us undertake home improvement projects, with the appetite for extensions and new buildings soaring as we sought to create more space for things like home gyms, offices, additional bathrooms, summer houses, or just extra living room. The passing years might have brought other changes, too – clients may have had children, or acquired big-ticket items like an expensive bike.

All of this means that clients’ policies might be out of date, with an inadequate level of cover that isn’t meeting their current needs and is leaving them financially exposed – a position no-one wants to be in in the current economic climate.

On the flip side, clients’ circumstances might have remained the same, but offering to review their current GI policy could see you saving them money while still offering the same level of cover – something they would undoubtedly appreciate and that would help strengthen the clientadviser relationship.

Getting into the habit of discussing GI needs with all clients now is also in the spirit of the incoming FCA consumer duty, and will stand advisers in good stead for when that comes into effect next July. With a focus on good customer outcomes, underpinned by consumer support, the reform is intended to promote responsibility across the whole retail financial services industry. For advisers, “good customer outcomes” could be interpreted as making sure customer policies are still appropriate, or at the very least having a referral option in place to ensure customers can get support with this elsewhere if you aren’t personally going to discuss GI with them.

In short, the remortgage market is ripe for this right now, and advisers should, if they aren’t already, be using it as an opportunity to check in with clients about their insurance needs. And that practice needs to become a long-term habit rather than something that flexes with the peaks and troughs of the market. For advisers, general insurance can be a steadying force in a turbulent industry. M I