General Insurance Review

What legacy will coronavirus leave?

Rob Evans

CEO, Paymentshield

There isn’t an industry in the world that has been unaffected by the coronavirus pandemic. The impact on financial services in particular could be felt for years to come.

This industry has adapted quickly to government advice and changed its working practices, with video calls and webinars now the norm.

However, many are questioning what the lasting legacy of the pandemic will be: will we keep the new working habits, and will those organisations that adapted and pivoted quicker than their competitors stand to gain more in the long term?

LOOKING BACK

There can be lessons learnt from the approach some advisers took during the 2008 recession. When the property market ground to halt, advisers switched to selling general insurance (GI) as a supplementary way of boosting income.

With the uncertainty in the property market currently mirroring that of 2008, a number of advisers are now reigniting that same approach.

Advisers are focusing on general insurance through three methods: working their back book; offering existing clients a financial review; and utilising remortgage applications to offer product transfers.

Our own research has shown that advisers selling eight GI policies per month over a period of five years can net almost £100,000 in commission.

To help advisers make the transition towards boosting commissions in GI, Paymentshield has launched a series of learning and development training resources. These resources could help contribute towards the 15-hour CPD requirement that forms part of the Insurance Distribution Directive.

The series of webinars, e-books and whitepapers aims to break down the common barriers advisers face when selling general insurance, arming them with both the knowledge and the confidence to carve out opportunities to supplement their income.

There was scepticism about how the industry would react to the new working practices, and in turn about the impact on productivity.

At Paymentshield, it was a huge challenge to go from 20 home workers to nearly 240 within just a few weeks, as well as setting up our virtual call centre, but our productivity has never been better.

Our pace of change delivery has increased, and customer and broker calls are getting answered quicker, with fewer drop-offs.

With many advisers currently on furlough, we have seen a trend where more customers are contacting us directly to renew policies, having struggled to contact the adviser who

would normally arrange renewal. In these cases, we have attributed the commission to the adviser who originally sold the policy.

The way in which advisers are communicating with clients has changed, and technology has been a great enabler.

Phone and video calls are now replacing face-to-face meetings and advisers are utilising social media to retain and attract new clients.

In our recent adviser survey (carried out before lockdown) 53% of the 215 respondents said that they use social media as a way of promoting their business, with Facebook coming out as by far the most popular platform with 93%, ahead of LinkedIn in second place at 64%.

QUICK RESPONSE

The COVID-19 pandemic has accelerated the scale and pace at which technology is being adopted in financial services, and social media is playing a key role in this explosion.

We are seeing more advisers take to social media and use it as a channel to reach new and existing clients.

The established platforms, such as Facebook, LinkedIn and Twitter, will continue to be the main social channels used to reach clients, but platforms such as WhatsApp are also increasing in popularity.

Social media has been a vital tool during the pandemic to help people maintain communication channels, and many advisers are taking a multichannel approach, increasing the ways in which clients can engage with them.

The insurance and financial services industries often suffer from a reputation as slow-moving beasts; however, the response to COVID-19 and the results of observing government guidelines and restrictions would demonstrate quite the opposite.

It has brought both industries closer as organisations pull together, share knowledge, collaborate and help each other get through this.

It remains to be seen what lasting legacy the pandemic will leave, but a renewed focus on GI and greater use of technology to engage customers are two habits I think are here to stay. M I

Life after COVID-19

Geoff Hall

chairman, Berkeley Alexander

With everyone reeling from the impact of COVID-19, the ramifications for brokers’ businesses will be massive.

Mortgage sales are likely to take the biggest hit, making renewals business and all other additional income vital in keeping the ship afloat in rough seas.

And it’s not just about your business. Every Financial Conduct Authority (FCA) authorised company has the regulatory duty to help it meet its objectives: protecting consumers, ensuring the integrity of financial markets, and making sure competitive markets work well for consumers.

It is an old refrain when markets take a turn for the worse, but general insurance (GI) sales have long been the saviour for brokers when mainstream income becomes restricted.

I’ve worked for Berkeley Alexander for over 30 years and lived through a number of recessions; on every occasion, I have seen brokers weather the storm by increasing their GI sales.

Of course, at this time, it may not be appropriate to approach all customers on new sales. Clearly there is a need to approach clients sensitively, and whatever you offer has to be in their best interests, but they will value your help and support in finding the right cover at the right price.

Retention is key, but investing some time in an audit of your back book and looking for other opportunities should prove fruitful. Make a record of mortgage customers that didn’t purchase home insurance through you.

Also, what other types of cover would they benefit from? Do not restrict yourself to standard policies – often it is in niche or specialist policies that your client will derive more value.

For instance, do they own or run their own business? They will have commercial insurance, but do they own a property investment portfolio? That needs insuring!

Utilise the expertise of a provider with a broad range of product types and you will see sales and ongoing renewals from GI become a welcome source of income that all adds up, whilst also providing valuable support and assistance to clients.

Fully understand your existing book and extend it by looking at clients’ profiles for sensitive, targeted cross-selling, if appropriate.

We have to appreciate that the current circumstances are unusual, but there is still the opportunity to maximise GI income potential that should not be ignored.

M I

The unoccupied property dilemma

Whilst the arguments rage on over business interruption (BI), another area of contention that has come to light is how to handle unoccupied property.

This is clearly a critical issue now, whilst everyone is being asked to work from home, leaving thousands of properties and office buildings empty.

In my opinion, the industry has reacted quickly, with most insurers being flexible on the issue; saying that cover is still in force and extending the period to 60 or even 90 days before any restrictions on cover are applied.

In addition, most insurers are being reasonable over the conditions that apply, for example accepting that owners can’t carry out regular checks due to travel restrictions.

However, there hasn’t been a completely consistent industry-wide approach, currently meaning policyholders will need to check terms with their individual GI provider.

COVID-19 business interruption claims

The insurance industry is taking criticism regarding its handling of COVID-19 business interruption (BI) claims, unfairly in my opinion.

The government has been suggesting insurers can now pay out on claims because it has classed COVID-19 as a notifiable disease. However, most BI policies don’t have cover for this.

“BI is there to cover the lost income for a specific business against specified occurrences”

Typically, physical ‘damage’ needs to occur before business interruption insurance cover is triggered; this is known as the ‘material damage proviso’. A voluntary or mandatory closure as prescribed by the UK government is typically not therefore covered by most policies due to the lack of physical ‘damage’.

Some policies will have cover following enforced closure due to infectious diseases, but these are normally specified diseases; of course, COVID-19 won’t have been specified in these policy definitions.

Anyway, BI is there to cover the lost income for a specific business against specified occurrences. It is not designed to cover lost income as a result of a national, or worldwide, downturn in the economy.

COVID-19 is unprecedented, and the government may well decide in the future to take measures that compel insurance companies to grant policy coverage in some shape or form, with a levy charged on all insurances or a guarantee backed by the state, as has happened in the past with terrorism and flood cover.

COMMON SENSE LENDING DECISIONS

Our flexible approach and broad criteria mean we strive to say yes to our applications. In fact, we’ve been ranked #1 for common sense lending decisions. *

Because we look at cases on an individual basis, we can place odd cases where other lenders can’t. So coming to us first could save you precious time. INDIVIDUAL ASSESSMENT

EXPERT UNDERWRITING Our dedicated team understand that odd cases are never straightforward. Their specialist expertise is matched by our national BDM team, who are continually working with our underwriters to get you the answers you need.

*Savanta MV:MI Sept-Dec 2019 Base: 351