Opportunity knocks for PPI brokers

There can be no doubt that one of the biggest changes in the insurance market will be played out in the payment protection sector.

There have already been damning reports from independent market commentators and the Office of Fair Trading, the FSA is carrying out ongoing research and the Competition Commission is to review the market.

In the face of so much activity, it is reasonable to expect there to be significant changes brought to bear on the PPI sector and rather than bemoan the upheaval, we should seek to make the most of it.

Indeed there is no reason to bemoan the alterations that will be made to the market, as many of them are long overdue. Why more providers and intermediaries have not sought to do more about this in the past remains a mystery.

But now there is definite momentum behind the move for change.

The sooner firms can add their weight to the forward drive the better for all concerned.

The intervention of the Competition Commission will break the stranglehold that high street providers of PPI insurance currently have. At the moment, mortgage, loan and credit providers enjoy a huge advantage in selling PPI given their point of sale dominance.

This is unlikely to last. Legislators will break this up and create a more level playing field for other intermediaries to operate on.

However, this will only play into their hands if they are prepared to make the effort to take advantage of it. PPI is a secondary purchase and it is unlikely to change overnight.

However, there is a huge amount that brokers can do to help put themselves on the radar when it comes to clients taking PPI insurance out.

At the moment PPI is simply bought alongside the purchase of credit and is not seen as a standalone purchase, like motor or contents insurance.

There is no reason this should be the case, nor why firms do not market their ability to source and arrange PPI cover, which is more comprehensive, flexible and affordable than that being offered by the mainstream providers.

This is especially true as the internet begins to play an ever increasing role in the market and brokers are being given better and better access to products.

The likes of The Exchange and Webline are looking to bring independent providers onto their panels and deliver PPI over IT platforms. This will make it easier and more efficient for brokers to operate in this market.

For too long there has been the attitude that borrowers get offered PPI at the point of sale and if they take it good enough and if they do not then not to worry.

This is not good enough. In the same way that home insurance has stopped being a product automatically taken from the mortgage provider, insurance intermediaries must look at the benefits they can deliver clients by offering independent, standalone products.

Brokers have the ability to widen their product range and include PPI. They also have the ability to speak to clients about how they protect their financial commitments both now and in the future.

Brokers also have a duty of care to their clients to make sure they maintain and sustain their financial situation into the future, even if times should become difficult.

Given that interest rates are rising and individual insolvencies are running at record levels, it seems there has never been a better time for protection insurance to be at the top of the agenda.

Also, given the overhaul the market is currently going through at the hands of regulators and watchdogs, this has to be the perfect time for brokers to size up the best way to use the market to their clients' advantage and begin to explore some of the opportunities available to them also.

What brokers choose to do with that opportunity is up to them, but they will surely kick themselves if they miss it despite all the attention it has been given. IT

Simon Burgess is managing director of British insurance.com