Although mortgage protection gives new homeowners the peace of mind that they will be able to make repayments if the worst happens, until recently many mortgage brokers were reluctant to bring it up.
Fortunately, over the past few years there have been advances in technology designed to cut the cost of providing mortgage protection as well as the administrative burden that goes alongside it.
Robert Harvey, head of protection advice at financial advisers Drewberry, believes improvements in technology have helped advisers better integrate protection as part of the mortgage application process. “The introduction of algorithms and machine learning technology into the underwriting process, has made it easier and simpler than ever before to apply for mortgage insurance and get an underwriting decision instantly,” he says.
“Any technology that can work alongside the mortgage application to encourage cover in the initial phases of the loan application is welcome. It's here cover is most needed and yet is perhaps most neglected given the complexities of applying for a mortgage deterring people from any additional administrative tasks on top.”
Although the technology needs for individual advisers are different, the one thing they all want is the best possible customer outcome.
Paul Yates, product strategy director at iPipeline, a provider of digital solutions and services to the life and pensions market, says: “Some advisers are looking for systems that can help them become more efficient, others are looking for solutions that will improve their sales effectiveness. All advisers are looking for solutions that can help improve customer outcomes and enhance their compliance process.”
Mortgage protection technology today
Researching the various protection plans used to be a time-consuming and tedious task, leading many intermediaries to avoid discussing the subject with clients. However, thanks to a number of technological improvements and the engagement of expert advisers, protection is becoming increasingly accessible for mortgage brokers.
Mr Harvey explains: “There are a number of technological innovations in the sector that can be considered really useful additions to the protection conversation, including critical illness insurance comparison tools, such as those offered by CIExpert, F&TRC & Defaqto. These are designed to make it easier to compare critical illness propositions across the market based on conditions covered, definitions of those conditions and the likelihood of someone just like the applicant being able to make a successful claim on the policy.”
Another recent introduction to the market has been UnderwriteMe, which removes some of the problems advisers might have in placing cover for someone with health issues by allowing them to generate a partially underwritten quote. It's particularly useful for life insurance, where there are many providers involved.
However, Mr Yates believes technology on its own isn’t enough. He thinks the wrong people using it or placing it in the wrong environment can severely limit potential benefits. “How many of us travel on high speed trains that can’t go full speed because the tracks they operate on are old and limit the potential journey time?” he says. “Technology must help clients understand their needs and risks in a simple way – either with an adviser or before they speak to one. It also has to help advisers assess all options for their clients in a simple way, provide them with insightful data to support their client conversations on an ongoing basis and allow them to present the most appropriate options that a client could want without forcing a sale or creating extra barriers.”
Emma Walker, chief marketing officer at financial advisers LifeSearch, agrees that good advice often transcends technology. “Many of our clients come to us via comparison sites and then we take it back to basics by having a conversation with them and understanding their needs. It’s often important to have that personal touch that technology just can’t provide.”
The future of mortgage protection technology
It’s clear that technology has great potential to continue breaking down barriers preventing advisers and consumers to engage with and source mortgage protection.
However, mortgage protection is behind other sectors in the insurance industry, such as home insurance, where ‘smart’ insurance quotes have been introduced. These quotes only ask a couple of basic questions and then use big data to fill in the blanks to create accurate pricing.
The particular considerations related to the life sector mean that adapting this kind of technology will be more complicated and will likely need substantial work before it can be launched, but the industry is already seeing the use of big data resulting in improved efficiency, client engagement, and the likelihood of higher conversion rates. Blockchain is also increasingly being used to facilitate a more simplified process while at the same time building trust in the exchange of comprehensive medical records – often a huge obstacle for all parties involved.
Mr Yates observes: “While the use of improved analytics, artificial intelligence and blockchain won’t close the mortgage protection gap on their own, in the right environment, technology can achieve better engagement and continue to remove barriers for consumers and advisers alike.”