As the buy-to-let market continues to grow, property portfolios are no longer the preserve of the professional landlord. We ask John Bibby for his views on the key insurance issues for the one million UK landlords acticalities of risk prevention.
Q. What particular opportunities for insurance are there within the buy-to-let sector?
JB. Non-professional landlords - those with a portfolio of less than £1m - now account for 79% of the 2.5 million private rented dwellings across England and Wales. We've identified these property owners as the most influential in the current marketplace.
Q. Why has this area grown so significantly?
JB. Demand for rented property has grown for a number of reasons. House price rises and restrictions on the government Homebuy scheme have obviously had a huge impact, with fewer people able to afford to buy.
Other factors include the shortfalls in new-build, the increasing number of young people requiring student accommodation, more people coming to the UK to work from abroad, the higher divorce rate and the increase in single-person households to name but a few.
There are also positive reasons, such as lifestyle choices about flexibility on where and how to live.
This has all led to more confidence in those looking to invest in buy-to-let property and those who fund it. Buy-to-let mortgage interest rates are now in line with owner-occupied mortgages and lenders now give more consideration to rental yield when making decisions. House price rises have allowed people to increase equity to invest in more property and given them a more secure investment than was previously thought possible.
Q. You have announced a new insurance product for the let property market. Why are you so sure that this market continues to provide strong opportunities?
JB. The buy-to-let sector will not be affected by the predicted slow-down in house price growth for the property market generally.
Rent conditions are favourable, with incomes having risen 12.9% over the last two years, and there are a relatively high number of professional investors operating whose decisions about holding onto their property are based more on income rather than capital growth. One of their biggest concerns is to protect their investment, so insurance is seen as integral to their portfolio's future.
Q. How then can insurance providers maximise the potential within this market?
JB. Many non-professional landlords are relatively new to this kind of investment and are unaware of why they should protect their property. By targeting this sector in particular, insurers can educate the market and help ensure its continued performance.
Q. How does the new Acumus residential let property product meet landlord needs?
JB. Very competitive premiums are charged for buildings and contents cover for a wide range of tenant and property types. The policy also covers loss of rent, landlords' liability, accidental damage and alternative accommodation.
The product also has one of the most comprehensive and detailed rating systems available, which provides quotations based on individual postcodes and cover for flood and subsidence areas normally excluded by other providers.
Generous discounts are given for properties with improved security, for three or more properties and for landlords over 40. An unlimited number of properties can be included on a single policy.
Q. What advantages does Acumus offer the insurance industry?
JB. The Acumus system is designed to provide a faster, more efficient way to transact let property insurance and can generate a policy in under three minutes from the broker's log on.
It also provides automated policy issue, policy adjustments, renewals and a suite of management/sales reports - all easily and quickly accessible online.
We provide marketing support, flexible underwriting and a true partnership approach, encouraging brokers' views, questions and comments. As part of the Primary Group, we benefit from the strength of a worldwide insurance distribution and risk management company that transacts annual insurance premiums of over £1bn.
Underpinned by a philosophy of quality products and services and unrivalled service, we are not surprised the new product is already being so well received by our trading partners. By combining great product and prices with a slick and efficient delivery system we have launched a strong proposition within the market.
- John Bibby is managing director of Acumus Insurance Solutions
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