The antidote to instability

The antidote to instability

Rob Evans is CEO of Paymentshield

To say that 2020 had its ups and downs is more than putting it mildly. It’s no secret that last year bred major instability in the mortgage industry. Within the same six months, advisers witnessed not only the lowest ever recorded rate of monthly mortgage approvals, but also an appetite so high that lenders had to pull products.

Although the launch of the biggest ever NHS vaccination programme in December revived hope for a so-called ‘normal’ 2021, many unknown quantities are still at play, making predictions around the future shape of the property market challenging.

Take, for example, the end of the stamp duty holiday and the market disruption it is likely to bring. After a period of stimulated interest and increased mortgage volumes in 2020, many industry commentators have expressed concern over a slump at the holiday’s expiration in March. This is not a universal truth, though – there will always be a base-level demand, as people will always need to move home.

Resilience and adaptability have been, and will continue to be, the insurance industry’s biggest strength into 2021 – that’s certainly been the case at Paymentshield. As much disruption and upheaval as last year brought, it also provided key insights into how we can evolve operationally and fortify our proposition even further.

It should be no different for advisers, who should be thinking beyond March about making themselves indispensable in the long-term – whether by maximising new digital opportunities, or even using the ongoing Financial Conduct Authority (FCA) consultation on fair pricing to position themselves in opposition to price comparison sites as trusted and knowledgeable experts.

Assuming a solely reactive position does have its limitations, though. Over-reliance on opportunities brought by external factors, such as stamp duty or FCA policy change, lends itself to quick, short-term wins. Advisers must think beyond those things that are subject to huge fluctuation, and instead aim to build resilience into their income streams in a more durable and sustainable way.

To that, I say don’t underestimate general insurance (GI). GI may not be a lottery win, but when made a habit out of, it is a dependable and valuable asset – it helps keep the lights on.

Besides the obvious, having income streams that advisers know are reliable has real lifetime value. In the immediate, it enables advisers to plan better, in the mid-term it helps them to weather storms where core income is more volatile, and long-term it can provide support through periods of unanticipated upheaval like 2020.

Introducing a GI specialist – a dedicated employee responsible for the sales and administration of general insurance – into the business is a particularly cost-effective way to diversify into GI sales and build resilience into profitability.

As soon as a book of business has been built up, generating a recurring income becomes relatively low maintenance. Paymentshield’s CPD centre can help with this too, as it provides extensive resources on GI best practice.

Paymentshield already works with 239 GI specialists nationwide, and it’s no coincidence that each of our top five highest-earning firms all have this position as an established role within their operations.

Further still, with the financial pressures on mortgage advisers only set to increase following the FCA’s proposed 66% price hike in application fees, GI represents an increasingly resilient source of income.

Insurers and intermediaries may have endured the upheaval of 2020, but this by no means guarantees smooth sailing in 2021 and beyond.

Moving forward, it is crucial for advisers to adopt a two-pronged approach, both remaining agile to any challenges or opportunities arising from a mercurial property market, and taking measures to insulate themselves against current and future uncertainty, such as diversifying into GI.

It is this blend of proactive and reactive strategies that will enable advisers to bear disruption in the market today, tomorrow, and for years down the line.