According to the research, huge price differentials in the market are forcing brokers to examine their third party relationships closer than ever before and ensure they are getting the best value for their clients.
Research commissioned by Britishinsurance.com from Defaqto highlighted the spread, even between some of the best known and respected specialist providers.
The research found that specialist brokers, selling policies for a 25-year old, range in price from £7.25 per £100 of cover, down to £1.60 per £100 of cover.
This means that an individual looking to protect a monthly mortgage payment of £700 would pay anything from £50.25 down to £11.20 a month. Over the course of a 25-year mortgage this equates to a difference of £11,715.
Simon Burgess, managing director at Britishinsurance.com, said at £1.60 per £100 of cover, his BestInsurance (ASU) policy was still economically viable and that it was aimed at helping first-time buyers protect their mortgage in an affordable and effective way.
“There is no reason why more margin could not be taken out of many of the products in the market to provide better value for clients and help those that really need the insurance to afford it.”
Burgess questioned how intermediaries not sourcing the market to find what was best for their clients could stand up their actions in light of FSA regulations.
He added: “There is a huge jump in the prices that are available although the products are broadly similar. Intermediaries turning to the specialist providers still need to be aware that there are huge price differentials at work and make sure they provide good value to their clients.”
Britishinsurance.com is one broker to include age bands in its MPPI policy, allowing the firm to differentiate clients and offer a rate which is more appealing to younger borrows in the market.
Burgess said: “The protection gap is widening and we need to do everything we can to help younger borrowers stay on the property ladder once they are there.”
