How I helped my Mother for the first time in 35 years!
My mother (yes, she is still around!) became an accidental landlord a few years ago and has always sorted her own insurance and finances. It’s not that we don’t get on, I just made a rule when I first started out that I would never advise close friends or family. I would always offer an opinion if asked, but I always put some distance between my personal and professional life. I had two reasons for this, firstly, with the best will in the world, things can go wrong; a lost form, a missed direct debit, an underwriting mistake, the list is endless and having to explain and put right things when it involves the nearest and dearest is just not worth the grief.
The second reason became obvious to me when a friend of mine started work years ago with one of those long gone and not missed companies like General Portfolio or Allied Dunbar. I honestly can’t remember which one, and there were others just as bad, but collectively they, shall we say, were very focused on “the sale”. One of their training techniques was to present to a group of new and naive salespeople with a scenario that demonstrated the perceived need for, for example, Life Insurance. It went something like this:
Trainer: “Did you know that 17 out of 18 people with children under the age of 12 do not have any Life Insurance?”
Class of simple salesmen: “Good grief, that’s terrible”
Trainer: Isn’t it just! How many of you here today have children under 12?
Class of simple salesmen: *many start counting on their fingers – some of the brighter one’s put their hand up*
Trainer: Ok, How many of your friends or family have children under 12?
Class of simple salesmen: *All confidently put their hand up and enthusiastically mutter positive mutterings*
Trainer: “How would you feel if one of your friends and family died leaving those children in financial dire straights”?
Class of simple salesmen: *Universal declarations of feeling devastated*
Trainer: OK, you have a pen and paper in front of you. Write down the names of ten people you know with children under 12. Put your name at the top.
Class of simple salesmen: *scribble scribble*
Trainer: All finished? OK, hand all those lists to me.
—Training session continues on a different theme until 5 minutes before home time—
Trainer: Thanks for all your work today, we will meet again this time next week. You remember those lists that you wrote earlier? Well, I’m handing copies back to you and your homework for this week is to make appointments with all of them and sell them some insurance. I will be giving copies to your managers.
Class of simple salesmen: *Collective looks of abject terror coupled with fear of losing a well paid job*
I should point out that this was the case about 25 years ago and was one of the reasons that regulators became necessary, the selling techniques used now are a lot more subtle! The lesson I learnt was that if you have to rely on friends and family to do business you are either no good at what you do, or, its a bad business.
Back to my Mother…
Anyway, back to my Mum’s landlord insurance. She has remained loyal to a local broker for this insurance since she has had the property and, in timely fashion, she was sent her renewal. This time though she gave me a call and said the premium had crept over the £200 mark and what did I think of the price?
Those of you that have read my posts before will know that I am a huge fan of brokers, but there is a but. I think that nowadays a broker should be qualified and preferably chartered. They should devote their time to helping people get the right insurance at the right price using their experience and knowledge. The current marketplace means that I do not see how they can compete with the direct and online offerings with regard to the simpler products that generally cost less than £500. (unless it is part of a larger portfolio of business). I do not see the point of going to a high street broker, speaking with an unqualified adviser who is following a script and will refer me to the insurance companies own customer service for any queries and, I think anyone who does is at best misguided or just mad.
Renewal £203, includes Admin Fee of £15 and commission of about £40. Good value?
The renewal was £203 including a £15 admin fee. I am familiar with the commission levels and a typical landlords policy will pay 20% – 25%, I have even seen up to 30%. A number of insurance companies provide brokers with online quote systems which offer the flexibility of letting the broker choose the level of commission they can take. This is why when you call about a renewal and say you are thinking of changing providers, the price can sometimes drop quite quickly.
I went online, put her details in and instantly got a quote for £156. The insurance company was a household name, the cover was the same and they offered 24/7 telephone claims support. I clicked “Buy” and the documents were with me instantly. Mum was happy. Very happy. And so should the broker be. Why they are spending time, money and effort chasing a market they really can’t compete in I just don’t know. I happen to know that they are mainly staffed, at customer facing level, by minimum wage and non qualified people who are not allowed to give advice. They are offering nothing that cannot be done online by the customer themselves. So…
Be good to your Mother – shop around!