1. Different types of General Insurance
2. How you can use these to help protect your clients
3. The variety of circumstances where these will apply best
4. How to introduce these products into client communication
5. How to build these products into your business proposition
PRESENTER: In this learning module, we’re going to be discussing general insurance and the role it should play in an adviser’s business. We’ll look at different types of insurance under the general insurance banner; how you can use these to help protect your clients, and the variety of circumstances where these will apply best; how to introduce these products into client conversations. Our two tutors have a lot of experience in helping intermediaries in this field. They’re both from L&G, Legal & General. They are James Gittins, Market Development Manager, and Simon Hird, Account Director for Intermediaries.
They’re going to identify what you should be aware of in terms of making sure your clients don’t lose their homes, for example, and protect the contents against different types of risk; landlords insurance; insuring against income loss; and insurance to protect families. We’ll discuss the introduction of these subjects into the client conversation, and we’ll explore some of the common objections advisers have to engaging in GI for their clients, and of course we’ll look at what help is available for advisers to make this an important part of the business proposition, and in fact why you should bother at all.
So I began by asking James to outline the bare numbers of the opportunity for GI in the UK. So, James, just begin for us by outlining the main facts, the main numbers where general insurance and that opportunity is.
JAMES GITTINS: Well, absolutely, there’s a fantastic opportunity for intermediaries these days looking at general insurance. There’s over 25 million houses in this country, massive opportunity for intermediaries to get involved in general insurance. Really we look at the marketplace as around about 70% of the mortgages of today are actually done through an intermediary, financial adviser, and amazingly the low penetration of buildings and contents home insurance is only around about 25% of that number.
PRESENTER: Really, that’s quite shocking to realise that as you’re driving around estates and things people don’t have their…
JAMES GITTINS: Absolutely, because if you think about it, it’s the only compulsory insurance that you need to take when having a mortgage. So if you think about it very logically that should be really the first port of call that the adviser should look at to ensure that the mortgage can complete correctly.
JAMES GITTINS: I mean it’s astonishing really. It’s one of those ones that people tend to overlook. A lot of the intermediaries, financial advisers are spending a lot of time on the mortgage. The mortgage does take a great deal of time and consideration for your clients, quite rightly so. Then they concentrate on the protection side, and normally there’s a little bit of apathy when it comes to general insurance, partly down to finding time and just putting it as a priority when they’re talking to a customer. One thing that we like to very much talk to our advisers about is very much the duty of care of course. Duty of care is absolutely very much a priority, and should be a priority for advisers to consider.
PRESENTER: And just define precisely what you mean by duty of care. There are a lot of these phrases about, I often hear of holistic advice and all that sort of stuff, so duty of care.
JAMES GITTINS: Well we’ve always gone, the concept of L&G is the fully protected mortgage, and that builds on a theme of the six ways that a customer could potentially lose their home. So that’s about giving holistic protection advice for the customer across all areas. So we look at the ways that a customer could lose their home, and that could be through an accident, through illness, through death of a family member, but also through things such as storm flood or subsidence of the property, where they need that cover to ensure that we can protect them and build their home back to where it needs to be.
PRESENTER: OK. There are two key areas that an adviser ought to be thinking about if they have this duty of care where a mortgage is concerned.
JAMES GITTINS: The two key areas really is looking after their major asset, their home, and then of course looking after their family and their health and their lifestyle if you like in terms of making sure that their priority is their children of course if they’ve got children. But making sure that they’re looking after their, as I say the biggest asset, their home, and number two their lifestyle and health.
PRESENTER: Isn’t it somewhat compulsory to have buildings insurance if you take out a mortgage?
JAMES GITTINS: Yes, absolutely. Most lenders will make it a compulsory condition of the mortgage that there is a minimum requirement to have buildings insurance. So therefore realistically the adviser should be advising on having buildings insurance and in fact preparing that for their customers.
PRESENTER: And the difference between just buildings insurance and buildings and contents.
JAMES GITTINS: So buildings is covering all of the main building itself – I quite often use the phrase of getting hold of a building. If you tip it upside down everything that drops out the building tends to be defined as contents. And everything that stays in your hand so be it would be defined as the buildings. So yes buildings is absolutely the mandatory part of a mortgage, and then the contents is the nice to have.
SIMON HIRD: Absolutely, but it does go beyond that as well Tony. We see a number of bolt-on elements to a contents policy for example, for cover away from the home. So we refer to that as personal possessions, and other insurers do as well. And that really covers the client or a customer for the things that they take outside of the home. So, you know, your pens, your phones, your laptops, golf clubs even for some people, and they take those away from the home and we find that customers tend to not buy that if they’re not given the advice around it as well.
PRESENTER: So in a sense they forget about that aspect of the risk in their lives.
SIMON HIRD: Absolutely.
JAMES GITTINS: A lot of customers will, as Simon said, don’t get that advice, they tend to go away from the home without thinking about their personal possessions; other things to add in that list as well is things like jewellery, expensive items that you would naturally take outside the home that you wouldn’t necessarily think about insuring.
PRESENTER: I can see that where an individual client is concerned, but there are some circumstances when people are landlords. How does it work in those circumstances?
JAMES GITTINS: Yes, that’s a very good point Tony. I mean landlords is another fantastic area for an opportunity to an intermediary, not forgetting the buildings and contents but by asking one more question to your customers from an adviser point of view could be do you have a second home? Straightaway if they do have that second home then they’re walking into a landlord opportunity. There’s around about two million landlords in this country, and quite often we see that they’ve not got the right insurance in place. They don’t necessarily understand it. They don’t really understand the advice that is available to them to be discussed on landlord insurance.
PRESENTER: And you reckon, L&G reckons there’s going to be a huge growth in the rental market.
SIMON HIRD: Yes, absolutely. We’re seeing a big move from owner occupier with mortgage if you like to the private rental sector, and therefore an increase in buy-to-let properties. What we’re seeing is as well through mortgage intermediaries, through financial advisers, an increase in arranging those mortgages and buy-to-let funding for properties. So we’re seeing a huge growth there, and an opportunity for the intermediary to give landlords and buy-to-let clients of theirs correct advice on the correct insurance to have.
PRESENTER: By that you’re almost implying that some landlords have the “wrong” sort of cover.
SIMON HIRD: Well that’s correct, because there are a number of different types of landlords. I refer to some as accidental landlords.
PRESENTER: Yes sure.
SIMON HIRD: Those are the people who have inherited a property that was for all intents and purposes a residential home of a loved one or through divorce or marital changes, and they’re left with a property. And they sometimes don’t understand that just having a residential home insurance product on there won’t cover them when actually if the property is tenanted.
PRESENTER: So there has to be specific insurance if you’ve got tenants.
JAMES GITTINS: Well what Simon’s just said there is absolutely right. But our insight team will tell you that there’s 26% of landlords out there who have the wrong cover in place.
JAMES GITTINS: Correct, and the reason they’ve got the wrong cover in place is they think that their current residential insurance is covering them for their second home, not correct.
PRESENTER: I think for many landlords the idea of the horror of their tenants not paying their rent comes to the fore, and I’m certain that that actually stops a lot of people being landlords in the first place.
SIMON HIRD: Absolutely, there are two elements to that. There is the tenant who stops paying their rent, but also there are insured perils as we refer to them, such fire or flood or storm, which actually can cause a tenant to move out of a property. In that case a landlord if you will will still have to fund the mortgage against that property, but the property could take three or four months to actually put back into habitable condition. In that time a lot of the insurance policies do actually provide for loss of rent receivable as a result of an insured peril. So that’s one of the fundamental differences between and landlord’s insurance and a residential insurance product.
PRESENTER: So it effectively guarantees the rent.
SIMON HIRD: For an insured peril in that regard. We offer an additional element called legal expenses and rent guarantee, which is available on a number on insurers as well, which actually helps fund the debt recovery from the tenant if the tenant’s not paying. It can also help with any eviction process, but will also pay a benefit to the landlord for the rent that’s not been received during the period that the tenant’s not paying. So it’s important that advisers do understand that they can offer this to their clients, and certainly for a lot of landlords this could be very beneficial.
PRESENTER: Wear and tear on a property, when it’s being rented often people tend, don’t want to do them a disservice, tend not to look after it as well as if it were your own.
SIMON HIRD: So general wear and tear wouldn’t obviously be covered under a policy of insurance; however, malicious damage can be. So you can get situations where a landlord has rented the property to a tenant, and the tenant has caused damage which is deliberate. And you can have cover for that element as well. It’s something that we offer and a number of other insurers.
JAMES GITTINS: And to add to that actually, I mean there’s a lot of cases where landlords do get themselves into serious trouble when unfortunately the tenant hasn’t been as well as they thought they were going to be in terms of an ideal tenant in that property.
PRESENTER: They haven’t met their references as it were.
JAMES GITTINS: They haven’t met their references, and they’ve done damaged, they’ve caused malicious damage. It only needs to be the little bit of a party on a Saturday night, the red wine and the cigarette butts into the carpet and stuff, before you know it there is damage going on in that property: malicious damage, and if they haven’t got the right cover in place.
PRESENTER: And those are the sorts of things that an adviser should talk to about, to their client about.
SIMON HIRD: I have a phrase, which is you cannot underestimate the value of advice.
PRESENTER: Indeed, so we’ve touched on the business of landlords and income and buildings and contents insurance for a landlord. Let’s move back to the six ways I think you called it of losing your home: accidents, sickness and unemployment, develop that for us.
SIMON HIRD: Correct, so often it should be the bedrock of any protection. Advice should be to protect a customer’s income. Without an income there will be an outcome, and generally that outcome is that you can’t afford to maintain a lifestyle or your mortgage payments or debt, and therefore there is an outcome which can often be quite a negative result for a customer. Advisers should really look at protecting a client’s income at the outset. And that’s where everything should start. We would like to try and encourage advisers to certainly do that. There are two methods of doing that, the traditional long-term income protection product, which is typically a life protection related sale. But also the short-term income protection policy like an accident sickness or unemployment product, certainly that we and other providers within our market space offer.
PRESENTER: How do you differentiate that from the whole area of health insurance?
JAMES GITTINS: So accident sickness and unemployment is a short-term, as Simon says, it’s a short-term product. It’s normally renewable at the end of 12 months. It’s not for the life of the mortgage like an income protection policy would be.
SIMON HIRD: So obviously a PMI policy will cover you for the medical treatment that you may require as a result of being ill. What a short-term income protection policy does is actually fund an income for you whilst you’re either unable to work as a result of an accident or an illness, but also for unemployment. We still see, whilst we have lower levels of unemployment in this country at the moment, with the future of Brexit and other uncertainties I think it’s important that advisers talk to their clients about protecting themselves against unemployment. It is a high risk for people. Not everybody can walk straight into another role, but they still will have a mortgage to pay at that same time. So looking at that as an option for clients is a fantastic opportunity for intermediaries.
JAMES GITTINS: And just to add to that Simon, what you’ve just said there is absolutely correct. There’s a famous phrase really we try and encourage our advisers to talk to their customers about, which is pretend that if, we quite often say you hear customers saying it will never happen to me. And statistically accident, sickness and unemployment quite often you hear the customers saying it won’t happen to me, I will never have an accident, I will never have sickness and I’ll never be unemployed. We see it time and time again where the accident stats, the sickness stats, unemployment doesn’t go away, it keeps coming back. There’s leisure, there’s retail, there’s banking, all of those environments are having difficult times. People are being made unemployed.
PRESENTER: Certainly in my youth my headmaster said to me that I was likely to have at least six careers throughout my lifetime. Very wise man I have to say.
SIMON HIRD: Absolutely, I think it’s fair to say for an adviser their role really, particularly in the mortgage market, is to arrange and help a customer buy a property. But they have a duty to ensure that the client keeps that property, nd that for me it’s a duty of care.
PRESENTER: Good, this concept that comes up every now and again in the press, the business of people being grossly under insured. So explain to me what you mean by underinsurance. Sometimes I hear you guys speak and I think almost every day I could take out a new policy about something somewhere along the line, where does underinsurance come into play and when do I know I’ve got enough?
JAMES GITTINS: That’s a very good point, and it is very common. Intermediaries should be really advising the customers to take out the right cover. Quite often you see our customers going out and taking their own insurance out without advice. And when they’re taking out insurance without advice they’re not necessarily taking out what they really need. And therefore they could be under insuring themselves, for example for the amount of contents that they take out on the house. We’ve talked about landlords taking out the wrong insurance or not thinking that they’ve got the right cover in place. And quite often as Simon alluded to earlier on you’ve got the personal possessions cover. So if they take out personal possessions cover have they got the right cover for their contents away from the home for example?
PRESENTER: It is always quite a shock when asked by your adviser to do an inventory for example as to what goes on around, and how much it costs to replace it.
SIMON HIRD: That’s right, and we’ve got some tools that advisers can use, and they’re readily available in the marketplace from most insurers as well. But what they are, they allow a client to run that inventory, if you like, and work out the type of value of the contents, which can actually be quite surprising for a lot of people. There are some, I must stress though that there are some real concerns about underinsurance. Where people are underinsured they might not necessarily get the full value of their claim. So it’s a principle in insurance called averaging, and what we’ll look at is we’ll look at what the premium or what the insurance should, what the property should have been insured for if you like, what it actually is insured for, and the client may only get a proportion of the claim settlement.
PRESENTER: And that’s where an adviser really does come into play.
SIMON HIRD: Absolutely.
JAMES GITTINS: Yes absolutely.
SIMON HIRD: Because the adviser is informing the client of the requirement to have adequate insurance as well.
PRESENTER: And helps them calculate what is the correct amount.
SIMON HIRD: Correct, or at least helps them, point them to understand.
JAMES GITTINS: And people’s perception on the value that they need or the sum assured that they might need is quite often different to when you get the advice particularly when you’re looking at contents in the home. People go oh well I’ve just only got a few bits and bobs here and there, and it only adds up to X thousand. But in fact if they did it properly through advice they would realise that they’re going to be potentially underinsured. It’s a big danger.
PRESENTER: So that really form the basis for really good conversations with a client, why then do you believe that so many advisers don’t bother with general insurance?
JAMES GITTINS: Yes, I mean it is common as I said earlier on. We have a situation where our advisers out there are under, I suppose in a way a little bit of pressure that they have to get the mortgage sorted out for their customers, and that’s their number on priority from getting the customer into their home or remortgaging for their home. They then tend to focus on the protection side, and there tends to be a little bit of apathy on the general insurance side for a number of reasons really. And that’s, it could be down to the fact that they don’t want to necessarily get involved in the claim, they get a little bit worried potentially that the customer might be ringing them up to say look you sold me this general insurance and I’ve now got water pouring through my ceiling, can you help me?
PRESENTER: Get off your backside and come and, yeah.
JAMES GITTINS: There’s other reasons as well, tend to be things like the internet, people are worried about the internet being a bit cheaper. People think that they haven’t got time. People think that they are not getting reward, financial reward for it. So there’s various reasons that we’ve come across. Simon and I have been in the industry for many a year, and we hear it time and time again from advisers saying can’t be bothered to do GI.
PRESENTER: In my local area there are lots of flood risk areas as well, and I always imagine it must be like really pushing a stone up a hill trying to sell somebody insurance in a flood risk area.
SIMON HIRD: Absolutely, and as insurers obviously we look at those risks. And there are a number of reasons sometimes that a property can be placed in a flood risk area. It can be near a river, it can suffer from what we term as surface water run off as well in some instances. And also coastal storm surge. What the government and the insurance industry did was they got together and created a reinsurance pool call Flood Re. And what Flood Re is, it’s a levy that’s attached to all insurers that we all pay into, and that allows us to actually cede or underwrite for a different term the flood risk element to a central fund. That allows us now to start taking on more potentially riskier properties that sit in flood prone areas, and we can offset that risk element to the central pool.
PRESENTER: So the idea that an adviser shouldn’t bother with insurance if somebody’s in a flood risk area is just plain wrong.
SIMON HIRD: Yes, we were able, we are able now to cede those risks to Flood Re, and we’re able to offer competitive rates now on those particular products. And that’s across the industry as well. So all insurers now have access to Flood Re. We’ll make it easier during the next six months or so for advisers with some automatic underwriting rules in our systems, and as technology improves what I think you’ll see is more insurers following that as well.
PRESENTER: Anything to add on the?
JAMES GITTINS: Well, no, I mean as I say we hear it again and again from advisers saying oh I can’t get it on risk because we’re in a flood area. But again it’s contacting your insurance company and making sure that they do understand the situation.
PRESENTER: So we’re getting to the point where there’s no reason where somebody should not be able to find insurance.
JAMES GITTINS: Quite right, shouldn’t be scared of flood at all.
PRESENTER: Let’s return to this why should I bother with GI, and talk about the number of objections as it were. We hear about objections from clients but objections from advisers as to not to want to bother, really principally you hear a lot that people are simply doing it themselves these days, and therefore the adviser doesn’t have to bother.
JAMES GITTINS: OK yes, I mean we do, we hear a lot of advisers doing the mortgage, doing the protection, go and do the GI yourself, you’re probably best to find it, find your own way around. If they send their client off to do it themselves the chances are someone else will do it for them. And that somebody else doing it for them could well then influence the business that you’re…
SIMON HIRD: We’ve seen a growth in the aggregator market, the Compare the Markets, Money Supermarket, and of course they don’t just sell home insurance or motor insurance, they do mortgages, they do life insurance, and they do a lot of the things that advisers do. So if you’re pushing your client into that route the chances that they will also be marketed for additional products. The other part for me is that a client who’s going on an aggregator website is not receiving any advice. Do they know what they’re buying? Generally they’re looking for some other provider that comes top of screen. That’s not necessarily have the best cover that they need to meet their requirements. And only an adviser who’s having that conversation with the client can really understand that. They’ll do the mortgage, and they’ll complete in-depth fact find with the customer and know a lot of information about them. That puts them in the ideal position to give the advice that the customer needs on their general insurance.
PRESENTER: Let’s deal with price, can you Legal & General, and I’m going to ask you to speak on behalf of some of the really other large insurance organisations in the country, can you compete on price with the banks, the building societies, the Post Office and even the supermarkets who are now offering general insurance?
JAMES GITTINS: Yes absolutely, I mean very much so.
PRESENTER: Unequivocally, is that?
JAMES GITTINS: And to be honest it’s not all about price thought to be honest Tony. My point is from an adviser point of view it’s actually making sure that they’ve got the right cover for their customers rather than price. Price isn’t everything. Price is yes, people are very much price savvy and want to get the best possible price for their insurance, but it doesn’t necessarily mean they’re going to get the best cover in place.
SIMON HIRD: And I think that just re-emphasises this point that I’ve constantly made. You can’t underestimate the value of advice.
PRESENTER: All right, so an adviser shouldn’t really be saying, even if they feel there’s an element of it to what they shouldn’t be saying to a client go on the internet and find it for yourself, it’ll be cheaper.
JAMES GITTINS: No, because if they do it, if they send them onto the internet I can assure you that if they don’t do it as I say someone else will. And that someone else will potentially start eating away at other business that that adviser could potentially be having.
PRESENTER: Does an adviser need to know much about exclusions?
SIMON HIRD: A home insurance product has a number of features, as do a lot of the products that are available to intermediaries to advise on. They are pretty clear in terms of the policy wording and the key features and benefits. That is…
PRESENTER: You mean they’ve got a lot simpler over the years.
SIMON HIRD: They’ve got simpler; however it is up to the adviser to make this clear to the customer. In many instances if the customer’s buying off say Money Supermarket as a great example there, or a Compare the Market, they’re not having that explained to them for example what the excess might be on subsidence. What the excess might be on escape of water. Or indeed if the insurer has actually increased the excesses to drive the premium down so they appear higher up the screen. So those are the sort of things when a customer says to an adviser but I’ve been online and I can see the premium is X, and you’re asking me saying it’s a little bit more. It’s up to the adviser to explain the differences.
PRESENTER: And what you’re getting for your money as it were.
SIMON HIRD: Absolutely.
JAMES GITTINS: Yes, and if I can just add to that. I mean when you’re online you don’t necessarily see those, you quite often think well that price looks about right to me, and you take the price without getting the advice. Sounds a bit of a pun but it’s a good line. And actually if you go ahead and take it without that advice the chances are you’re going to have those exclusions omitted. You could well end up with the cover and not the right cover in place. Things like accidental damage, things like excess as Simon said, could well be overlooked when you’re doing it online.
PRESENTER: Now, you mentioned, you brought it up earlier on that a lot of advisers don’t want to get involved in the claim process, and therefore they shy away from general insurance because they think it might involve them in a huge amount of extra work. So how would you overcome that objection?
JAMES GITTINS: Well I mean the answer to that is the adviser doesn’t have to get involved in the claim at all. If they’re selling it correctly they should be positioning it that they’re providing an insurance provider, quality insurance provider to their customer, and it’s down to the insurance provider to handle the claim rather than the adviser. And what I mean by that is that if they position at point of sale that the insurance company will look after the claim for their customer, then if anything does happen in their particular scenario they should be ringing up the insurance company. The insurance company should then be well equipped to actually handle that case. From an adviser point of view the only real contact should be just contacting the customer just to see how it’s actually gone and is there anything they need to do from a claims point of view. But really my message is let the provider do it.
PRESENTER: There is though a general perception, misconception I suspect you would say, from outside the industry that the insurance business wants to try and wriggle out of claims. What do you say to that?
SIMON HIRD: That’s absolutely not. We pride ourselves at Legal & General paying 100% of valid claims. I think the point really there is that the customers need to understand what they’ve bought. Now I think an adviser plays a role in that, because they’re explaining to the client exactly what the policy entails and what the policy covers them for and meets their needs. If a customer has just bought that again from a supermarket or has just purchased that themselves they may not understand all of the elements of cover that they’ve actually bought and whether it meets their needs. And I think that’s what leads to some of this where people are saying well actually I’ve lost my golf clubs for example, I’m looking to claim but they were outside of the home and therefore I hadn’t selected the belongings cover. And I think that’s where advisers add value.
JAMES GITTINS: We quite often say to our customers through the adviser is that it’s all about the moment of truth. If they have to make a claim the one thing that they then take really seriously is how that claim is being handled.
PRESENTER: Are you proud of your claims team, do you sleep at night knowing that there are 300 claims a day at Legal & General general insurance policies?
JAMES GITTINS: Yes, very proud of the service that they offer. They’re formidable in terms of the team, the way that they act for our customers on behalf of the claimant and on behalf of the adviser as well. Last year for example there was floods up in the Carlisle area which we’re all familiar with. A lot of people unfortunately were in difficult situations with their properties under water. Legal & General actually took the great aspect of getting up there and being with our customers on the frontline, seeing the customers, acting with our customers to show them how we can help and how we can put their lives back on track.
PRESENTER: Right, I’m beginning to see now the clouds are beginning to part and I’m beginning to see the wood for the trees as it were to mix my metaphors. But I’m still wondering from a financial adviser’s point of view whether there’s enough reward in this area from my business proposition point of view.
SIMON HIRD: So obviously for general insurance it pays an initial commission. But it also pays a renewal commission. And what we’ve found through years of experience of advisers selling general insurance is that it’s very persistent in terms of its longevity with the provider.
PRESENTER: It’ll roll every year for year and year and year.
SIMON HIRD: Exactly, so we have very strong retention rates of products that are sold through mortgage intermediaries and financial advisers, and that really provides a recurring income for the adviser – which is fantastic because it means that they’ve got guaranteed, they can look at their future income from this product.
JAMES GITTINS: A lot of times you do hear advisers overlooking it thinking it’s not worth it. And it’s very much what Simon’s just said, they don’t look at the renewal income. And if they have that consistent new business flow coming through then that renewable income will come back.
PRESENTER: Will I not make more in an hour spent concentrating on mortgage protection than I would in an hour spent concentrating on GI?
JAMES GITTINS: Yes, that’s an interesting question. I mean we’ve looked at that through our mortgage club. The mortgage club have given us stats recently on how long it does actually take to do a mortgage. And to be fair we’re looking at around between eight and 10 hours to do a mortgage right the way through from start to completion. There’s a huge amount of work that goes on there for an adviser, and therefore it does actually eat up the time for doing the other protection and the general insurance. But however there’s no renewable income on a mortgage potentially, and the same, yes OK there’s less time to work on a protection case for a customer, less likely to have any renewable income on that, but general insurance is the only area where there’s definitely a reliable renewable income on an annual basis.
SIMON HIRD: Absolutely.
JAMES GITTINS: Less time to do the renewable.
SIMON HIRD: We’re seeing more and more principles of financial advice firms employing general insurance only advisers as well. They’re not going to require the full qualification level, and therefore they can advise on this produce in a relatively short time and start to develop more income for the practice.
PRESENTER: So if they were an adviser, as there will be advisers looking at this saying well I think I might stick a toe in the water and I might have a go at this, I might develop this area of my business, what sort of support is there out there for them?
JAMES GITTINS: Well there’s all sorts of support from Legal & General. I mean firstly we have an army, a team of people who are out on the roads, sales force, face-to-face advice that they can offer on business protection, protection and also general insurance that come to the offices of the adviser, and actually work with them to set them up with general insurance.
SIMON HIRD: That’s right James. I think they start with their either network or if they’re using a service provider. Most networks out there if they’re an appointed representative have a general insurance proposition, and that should be the adviser’s first port of call.
PRESENTER: So all you’ve really got to do is ask.
SIMON HIRD: Yes, who is on my panel, who do I have access to? And then start to engage with the providers. Because like L&G we’ve got a fantastic field team and a telephone account support team, but all the other providers have this as well. So the idea is that we grow a market for general insurance in the intermediary space, and we grow that, the advice that’s given there, and therefore ensure that more customers are protected.
PRESENTER: And I believe there are quite a lot of workshops out there, you’ve just recently been doing workshops which are entitled Why Bother?
JAMES GITTINS: Absolutely.
PRESENTER: Perfect title.
JAMES GITTINS: Well I mean we look at it about six months ago and we’re actually quite unique in the insurance industry now of actually offering workshops purely for an intermediary to come on, which is general insurance. It’s an educational piece, rather than actually sitting there pushing L&G. What we want to do is get our advisers up to speed on why they should bother doing general insurance. We look at the market opportunity. We look at the ways to overcome some of the, I suppose, intermediary objections that have cropped up over the past.
PRESENTER: And clients’ objections.
JAMES GITTINS: And clients’ objections to try and overcome that. We do it in a reasonably good environment. We take them out of their offices. We like to hire a venue, a nice venue. It could be a hotel in a particular area. We then invite a selection of intermediaries from that area to come along. Normally takes place during a morning. We run it for about an hour-and-a-half. I tend to deliver the training course and it’s very much an interactive session with our intermediaries, and we’re getting some fantastic feedback on it.
PRESENTER: So Simon, presumably if I asked the question where can people find out more it’s to go to your provider’s website.
SIMON HIRD: Yes, they can either contact their regional key relationship manager, telephone account manager or also visit L&G.com/advisercentre and much more information on our GI proposition.
PRESENTER: Right, well on that note I’m going to leave it with both of you. James and Simon, thank you very much indeed. But let’s now turn and have a look at an adviser themselves, so here is Matt Clark who’s an adviser talking about why he believes that general insurance is something that you ought to be involved in.
MATT CLARK: First of all I choose to do general insurance because I feel it’s a duty of care to my clients. I’m an adviser; I’m here to tell them what they should have. On my own point of view it’s a regular income. I get paid every single year that they renew the policy, and it builds up into a bit of a rainy day fund. We need to advise on general insurance again because it’s our duty of care to our clients. It ensures that they’re fully covered. They’re covered in every sort of way, and with a comprehensive policy like Legal & General’s you know they’re going to be covered well.
My process that I go through with my clients, I’m a mortgage adviser so I sort out the mortgage. And then say to them that you’ve now got the biggest debt you’ll ever have, this is how much it’s going to cost, and this is what there is to cover your mortgage and ensure that effectively you’re fully insured. I’d say it is an assumptive sale, but certainly don’t say you’ve got to have it. But I’d say most people do have this cover because they want to be covered. With general insurance I sell buildings, contents for residential properties, landlords cover, unemployment cover, the lifestyle cover as well. I cover all that spectrum.
I don’t say oh I’ll use a couple. It’s not for me to say they know everything, every option that’s available to them. They need to get the time. They need to have time. It might only be a small amount of commission if that’s how they’re thinking, but it’s payable every single year that they keep the policy. And as long as you sell the policy correctly and not just on price, you sell it on the fact that you’ve got things like trace and access, you’ve got all the bits and pieces that a good policy would have, there’s no reason why they shouldn’t keep it forever.
So my message to other advisers who don’t have the time or can’t be bothered to do the general insurance is just do it. It’s an absolute no brainer. You’ve got a duty of care to your clients to make sure they’re fully insured. If you are thinking about commission, oh it’s only a small bit of commission, you get paid every single year that you do it, why not do it with a good policy?
PRESENTER: In order to consider the viewing of this module as structured learning, you must complete a reflective statement to demonstrate what you’ve learned and its relevance to you. By the end of this session you’ll be able to understand and describe different types of general insurance; how you can use these to help protect your clients; and the variety of circumstances where these will apply best; and how to introduce these products into client communications; and how to build these products into your business proposition. Please now complete the reflective statement in order to validate your CPD.