Following recent research from Defaqto about the home insurance industry, specialist general insurance provider Assurant Intermediary has urged intermediaries to ensure their clients are aware of the risks of buying cover based on price rather than quality.
Kevin Paterson, sales and marketing director, commented: “While the recent home insurance report from Defaqto analysing trends in the home insurance market made for interesting reading, the tendency toward competition based on price is a particular concern.
“Certainly, this sector of the market faces a number of challenges as it works through a transition period. I think that is true of pretty much every area of personal lines of insurance. Price comparison websites have captured the imagination of consumers. The danger is that insurers in every sector will follow the trend of the motor market and focus on promoting price rather than cover.”
He went on to say: “Consumers naturally want to get the best deal possible – particularly in the current economic environment. There is a very real danger, however, that too many will fail to check whether they have the right level of cover and make their purchase decision on price alone. How many could afford to make up a shortfall in cover if their home was seriously damaged by flood or fire? What about loss of possessions? As everyone tightens their belts, trying to save a few pounds on home insurance could prove to be a false economy.”
Assurant Intermediary recognises that affordability will become an increasingly important issue for consumers as they review their household budget and cope with the impact of the Spending Review. The company is now developing a panel of insurers to enable it to give intermediaries access to a wider range of cover and price points for their clients. The panel is due to be launched early in the New Year.
In the meantime, Paterson has urged intermediaries to make early contact with clients as their home insurance renewal approaches. “Intermediaries are ideally placed to guide their clients through the renewal maze,” he said. Not all clients will be able to afford gold-plated cover, but with the right advice from someone that can explain what’s on offer, they can get the best cover that suits their budget.”