Insurance is one of the easiest areas for brokers to diversify into, and with so many Australians under-insured, it presents great opportunities
People research their car insurance obsessively - Where can they save money? Who is offering the best service? What are the policies and excess fees? Is it worth getting comprehensive coverage?
Not many people would consider operating an uninsured vehicle, but Australians are severely uninsured when it comes to protecting themselves against loss of income, accident, illness or death.
Ballast's CEO, Frank Paratore, says this inconsistency presents an opportunity for brokers.
"We all insure our cars and, basically do so without thinking," he says.
"Brokers just need to know how to present insurance to their clients, and then it should be a no-brainer. Insurance is all about one word: protection."
"The opportunity here for brokers is immense," says Mr Paratore.
Brokers, he continues, need to stop focusing on 'the sale' and realise that they're helping clients by offering them insurance, and helping them find solutions for their needs.
"They're looking out for borrowers as opposed to just thinking, 'This could be additional money for me'," he says.
Brokers are in a unique position to cater to people who need insurance. To start, though, they need to have the conversation with borrowers - which many aren't doing.
The Commonwealth Bank and Mortgage & Finance Association of Australia (MFAA) Home Finance Index survey for 2012 showed that many people aren't even being given the opportunity to discuss their insurance needs.
The survey, by CoreData, found that only 42.9 per cent of the 1,447 respondents were offered home protection insurance when they took out a home loan.
In addition, only 31.5 per cent were offered life insurance and 47 per cent talked about loan protection.
The survey also showed that if brokers decided to discuss insurance with their borrowers, they could experience impressive conversion rates.
According to the study, 36 per cent of borrowers took up home protection when it was offered to them. Loan protection insurance offered a 29.7 per cent conversion rate and 18.4 per cent of borrowers took out life insurance.
Brokers who cater to first home buyers are better positioned to diversify their revenue streams into this area, with the survey revealing first home buyers are more likely to consider all three forms of insurance.
MFAA chief executive Phil Naylor encourages more brokers to investigate the prospect of offering insurance.
“The survey shows that mortgage brokers have a great opportunity to cross sell insurance products, with both young and mature borrowers showing they are open to possible opportunities to protect themselves.”
Offering insurance helps brokers meet their duty of care for clients, while doing so can also offer additional revenue and can benefit the broker/client relationship, according to Mr Paratore.
So, with the benefits and opportunities relatively clear, why aren’t more brokers considering diversifying into insurance?
Certainly, many are concerned about coming across as pushy salespeople and would prefer to focus on what they know. Others may think it is too hard and outside their area of expertise.
Mr Paratore, however, says diversifying into insurance need not be an exhausting exercise.
For hesitant or unsure brokers, the best way to get started in insurance is to get involved in a referral program.
“Ballast offers a simple and accountable referral program for brokers who want to offer more to their clients, but don’t want to or are unable to offer certain services themselves,” he says.
The other option, of course, is to offer insurance yourself.
“It makes sense for brokers to offer insurance to their clients,” says Mr Paratore. “You don’t need to be pushy, but it’s your obligation as a broker to discuss options and make informed recommendations to your client.
“The house is probably a borrower’s biggest investment purchase of their entire life. We’re dealing with it and we need to make sure we’re dealing with it as a relationship, not just a transaction.”
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