“Extending the disregard for all housing costs would make things a lot simpler and encourage people in the private rented sector to take out protection,” he explains.
Targeting tenants
With this obstacle removed, more insurers are likely to follow L&G’s lead. However, Maxine Udall, marketing and research manager at Swiss Re, believes the protection industry will need to overcome a further obstacle. “Distribution is the biggest challenge,” she explains. “Insurers and advisers need to find ways to get in front of this group.”
For the Mortgage Advice Bureau, existing relationships with estate agents proved particularly useful during the L&G pilot. Where these agents also have letting functions, it is worth forging relationships to promote protection to tenants.
As well as growth in this market, changes in legislation may help to increase appetite among letting agents. The Tenant Fees Act came into force in May 2019, outlawing some letting agent fees for tenants. While some of these costs will have shifted to the landlord, some letting agents will be looking for other revenue opportunities.
Greater take-up of protection by tenants is also in landlords’ interests, reducing the risk of rent arrears due to a benefit shortfall or lack of savings. Leveraging this angle could also prove fruitful for advisers and insurers.
The Mortgage Advice Bureau also had success targeting future first-time buyers, including protection alongside mortgage affordability advice. “There are a lot of 35 to 44-year-olds renting who want to get on the property ladder,” explains Mr Thompson. “They often have kids, so protection is essential.”
Ensuring individuals in the private rental sector have access to protection advice is essential. And, as more insurers launch products tailored to the needs of those in rented accommodation, meeting their requirements will become easier.
