General Insurance review

Subsidence is a key concern for your clients

Geoff Hall

chairman, Berkeley Alexander

Summer certainly arrived with a bang in July, with the UK experiencing a new record temperature of 40.3°C and a total of 46 locations across the country exceeding the previous record of 38.7°C. According to the Met Office, this heatwave demonstrated much more widespread and significant heat than previous noteworthy extreme heat events, giving us a glimpse into the future, and the hotter, drier summers ahead.

Long dry spells bring the increased likelihood of clay-rich soils shrinking, creating downward movement in buildings, and adding strain to the structure of properties – known as subsidence. Signs include diagonal cracking and doors that don’t fit their frames well. The British Geological Society has predicted that the number of homes affected by subsidence will increase by a third from 2020 to 2030, and triple by 2050. The best preventative measure clients can take is to remove or cut back trees and shrubs planted too close to their property. The general rule of thumb is trees should be kept to a height less than 1.5 times their distance from the house, so a tree 15 metres from the property should not be allowed to grow higher than 10 metres. Clients who suffer a subsidence claim may only get cover with their existing provider unless they can demonstrate to a new insurer that rectification works have been completed and the risk of future movement is low; they are also likely to need supporting evidence from a professional surveyor’s report. For anyone looking to buy a property that has experienced previous movement, even if it is historic movement or has been fully underpinned, the purchaser may find arranging cover a struggle, and may need to commission a full structural report from a qualified surveyor and not just rely on the homebuyers’ report. However, it’s always worth checking in with your general insurance (GI) provider – we love a challenge. If you’re having difficulty sourcing cover for a client, there’s a good chance we’ve had to handle the same complexities before.

DEAL WITH WHAT YOU KNOW AND REFER THE REST

As I mentioned in last month’s column, increased consumer protection rules are regularly introduced to support customer outcomes, and the Financial Conduct Authority (FCA) has now confirmed new oversight requirements that will apply to the appointed representative (AR) regime, coming into force on 8 December 2022. The new rules will require principal firms to apply enhanced oversight to their ARs. Whether one is directly authorised or an AR, the FCA rules apply to us all. We all have to adapt and change with regulation to ensure good customer outcomes.

For general insurance, most mortgage brokers are likely to handle standard home insurance for their clients, but when it comes to the more complex products (whether that be non-standard home insurance or complex commercial), referrals to a GI provider with specialist product knowledge enhance your opportunity to reach more customers with a wider range of policies to meet their demands and needs. It’s long been said, whether you’re an AR, a directly authorised broker, or a principal, that you should deal with what you know and let those who are experts in other fields deal with the rest.

BUILDING SAFETY ACT 2022: WHAT WILL IT MEAN FOR PLACING PROFESSIONAL INDEMNITY?

The Building Safety Act 2022 came into force on 30 June 2022, finally bringing into law much-anticipated, far-reaching changes to the ways that building design, construction, management, and safety are regulated, with a particular insurance impact on high-rise properties. The Act creates new “duty holders” and expands the roles of existing duty holders under the Construction (Design and Management) Regulations 2015 (CDM), and additionally makes those duty holders more accountable. These duty holders are responsible for the whole life cycle of a building, from pre-construction procurement through the construction phase to the post-construction occupation and property-management stage.

With more responsibility comes more risk. As far as possible, the principle to be applied is that the person or entity that creates a building safety risk should be responsible for managing that risk.

At this stage it’s too early to gauge insurance market reaction. Professional indemnity (PI) premiums may be affected – bad news for a sector that’s already operating in a hard market that has pushed rates up and driven capacity down. The market conditions with PI are tough, but if your construction clients are facing reductions in the availability and breadth of PI cover, then work with a GI provider with the knowledge and experience needed to achieve the best possible solution for their needs. M I

Training new GI specialists

Emma Green

director of distribution, Paymentshield

The current skills shortage in the adviser market is just a microcosm of the wider UK – with an astonishing 87 per cent of employers nationwide currently admitting that they are struggling to fill positions. But there’s more than one way to define a skills shortage, and more than one way to tackle it. Thankfully, here in the financial services industry we can take encouragement from certain facts.

First, unlike some of the life-anddeath scenarios we hear about in the national media, the financial services skills shortage is not yet at a crisis point. By comparison, we still have a solid base of good people in the advisor community to keep the wheels turning.

Secondly, with enough advance planning, we have much potential within our industry to help turn the tide by focussing on bringing in people with great customer service skills and then filling their skills and knowledge gaps with quality training and support.

Of course, we recognise that this might be harder for smaller businesses – which are stretched enough with the day job and may not have the resources or the thinking time for HR and learning and development (L&D) activities. But it takes every shape and size to make a community, and larger businesses should consider how they can support smaller ones.

We hugely respect, for example, the initiatives of the Openwork Partnership and others, with their academies and business schools to help train the next generation of mortgage brokers. As insurance experts in our space, we are committed to continuing to develop our existing CPD-accredited GI Academy to offer support to those new to the market who want to advise on general insurance alongside a mortgage – as well as ultimately supporting firms looking to recruit and train individuals to specialise in selling GI (general insurance) alone.

In addition, we’ve continued to maintain the largest intermediary sales team in our market. That’s because we recognise that to truly make GI accessible to advisers new and old, you absolutely need stand-out technology that delivers an accurate quote for the customer, but you also need to provide the support to ensure that technology is adopted and to help in developing advisers’ skills, confidence, and mindset.

We know from our market research that there remains a gap in the market when it comes to general insurance. In our most recent adviser survey, conducted with over 300 advisers, we found that despite 96 per cent of advisers believing that discussing GI with their clients is best practice, 57 per cent regularly miss opportunities to do this. Training and support are needed to address this.

It’s also incumbent upon us to make sure L&D initiatives are both easily accessible and as engaging as possible.

In today’s tech-driven business, we must remember that we already have so much of the necessary infrastructure to deliver a truly significant training and learning experience. The power of such technology as our chatbot, for example, will enhance an already engaging user experience by offering immediate support to those less experienced by answering questions and giving guidance. This is another example of how technology will continue to make advisers’ lives easier every day. M I