Protection sales saving mortage brokers

Mortgage brokers are becoming increasingly reliant on the protection market to survive and are calling for unemployment cover to become standard on income protection (IP), according to new research.

Protection now accounts for almost 40% of a typical mortgage adviser's income and more than three-quarters view it as "very important" to their business, the survey revealed.

David Burns, director at consultancy group NMG who carried out the study, believes when compared with figures from two years ago, this marks a key turning point.

"It's a real sea change in the mentality of brokers," he says.

"We don't sense this is a kind of one off hit. There's evidence about that from the products they are selling. These people are becoming more and more protection type advisers rather than just mortgage brokers.

"Once they've got into habit of doing protection they are going to stick with it," he adds.

With mortgage-based income falling to just 44% of total average income, the results show that higher take-up rates for IP and critical illness (CI) are proving attractive to brokers, compared to much lower ones for products such as Mortgage Payment Protection Insurance (MPPI).

This figure could grow further as, once again, more than three-quarters believe take-up rates would increase if more stand alone income protection products offered an option for unemployment cover.

Although selling these protection products can be daunting to new arrivals in the market, Burns believes this feeling of trepidation is now wearing off.

"There's big income coming from life products," he says.

"The complexity of underwriting these products is quite time consuming, but the view maybe changing on that as IP is taking over from PPI.

"It will be interesting to see how this looks in three-to-six months time once we start to see the Government spending cuts which we know are coming," he adds.

And those pending Welfare State cuts are also pushing brokers into a more positive frame of mind, with 41% predicting an increase in protection sales as a result.

While 57% are not sure, just 2% feel it will mean a decrease in business.