Boxing clever
MORTGAGE SOLUTIONS - 12TH FEBRUARY 2007
Simon Burgess looks at how recent advances in technology could enhance the sale of mortgage payment protection insurance.
Many believe the next six months will be some of the most important in the history of the UK’s mortgage payment protection insurance market. Huge changes are afoot in the design, delivery and regulation of the sector, and this should help revitalise a market that has been its own worst enemy for too long.
Improvements in IT systems have already had a major impact in the mortgage payment protection insurance sector and there are a number of imminent changes which will prove to be very significant indeed, in the main, these revolve around improved access to products and a wider choice for intermediaries who plan to service their clients’ needs quickly, effectively and, most important of all, compliantly.
Changes afoot
Two of the biggest changes on the horizon will be delivered by The Exchange and Webline. The Exchange has established itself as one of the predominant distributors in the IFA market, and in its exweb portal, has created an online trading environment used by almost 25,000 advisers across the UK.
In recent months, it has been exploring an extension to its services, and plans to bring a fully developed offering to marker covering mortgage payment protection insurance and building and contents insurance. At the moment, The Exchange believes there is little in the way of support or real choice for intermediaries in this market and has conducted extensive research into what advisers are looking for and the kind of environment in which larger networks wants to operate. By combining the two, it hopes to create a vastly improved alternative to what is currently available today.
At the moment, some of the so-called aggregators and online protection intermediaries offer little in the way of product choice and control the agency agreement with insurers for themselves. This creates a rigid framework within intermediaries have to operate, and does not match the individual requirements of many firms or their clients.
Instead, The Exchange wants to offer intermediaries the widest choice possible in the market, but also allow them the freedom to establish and manage their own relationships with insurers. Firm a network’s point of view, this means it will be capable of choosing the providers it wishes to deal with and of negotiating for itself the terms and conditions by which it does so. The Exchange will merely be the conduit through which they conduct that business.
The idea is not only that intermediaries will have access to a much wider choice than is currently available through other online offerings, but also that they will be able to run their own business relationships with providers.
At the moment, full details of The Exchange’s offering have yet to be announced, but as a market, we should be excited by the step forward it will represent and the greater choice it will create.
Alongside this development from The Exchange, Webline is also revamping its offering in the protection arena, aimed at bringing a host of independent providers within easy reach of the intermediary market. It also believes the systems it has in place will make it easier and quicker than ever before to provide cover for clients in this area. Webline currently has around 18,000 users and says developing its offering in mortgage payment protection insurance has all been to improve the ease of use and choice that intermediaries experience when selling mortgage payment protection insurance.
Delivering real-time quotes will ensure rates are current, while the systems it has in place allow application forms to be pre-populated from the information currently held on client files in the intermediary’s own back office system. In turn, any activity carried out on Webline will be recorded and the appropriate client records will then be automatically updated.
Where intermediaries are searching for life quotes, for example, quotes on other products will be generated by re-using the same client information, putting a range of options in front of the adviser and their client. According to Webline, the idea is to begin to use the data that sits on numerous systems across the industry and help them to bring it together with minimum effort and maximum results, providing wide-ranging access to products and information.
There is no doubt that the successful delivery of such platforms will help the intermediary market deliver the best possible option for clients across the mortgage payment protection insurance market.
To date, there has been a reliance on the default products offered by lenders, because the commission involved were good and little effort was required to do so. However, this approach is no longer viable within the current regulatory framework and slowly the stranglehold that high street providers have on the market is being loosened.
The internet has a huge role to play in this, and if the intermediary channel is given the ability to access real choice and best value through single entry points, there is no reason why we should not see a significant change in the way mortgage payment protection insurance is bought and the providers who make up the market.
Improved access
Given that the intermediary channel accounts for almost two-thirds of mortgage sales, it is surprising that it accounts for less than a quarter of all mortgage payment protection insurance sales, and this is something that better access to a wider range of products will improve dramatically.
There is currently a focus on the payment protection insurance market generally, in the way that products are designed and distributed. A growing number of enforcements against some of the larger players in the market and a forthcoming investigation by the Competition Commission will really accelerate the speed of change the sector experiences.
This, in combination with the innovative and tailored services being offered by the likes of The Exchange and Webline, will help to bring mortgage payment protection insurance back on to the agenda for all the right reasons and help intermediaries take confidence in offering the cover to clients.
Given the changing interest rate and inflationary climate, this could not come at a better time for borrowers, who have rarely been under so much pressure in the face of rising property values and ever larger mortgage debts.
Simon Burgess is managing director of Britishinsurance.com
