Mr Riach says: “Where we would not have done the protection element until completion, I am contacting clients and saying: let’s apply for this now, before the insurance companies put in an exclusion.”
Mr Reynolds says: “Having a balanced business is key at any time, but will be even more so moving forward; ensuring that [advisers] are reviewing all protection and GI opportunities with their client bank and not just new customers attached to a mortgage.
“Now is also a good time for advisers to look at their customer contact strategy and how they market to clients.
"The more advice and support they can provide via a variety of channels the more they will add value to a long-term, ongoing relationship.”
While there are opportunities in the protection market, brokers also need to be aware of issues that could come up particularly during times of uncertainty, warns Mr Riach.
As clients become more anxious about the future this could lead them to cancel their life and protection policies, because they perceive them to be unnecessary expenses.
However the irony, as Mr Riach points out, is that critical illness and income protection policies can protect their income, where they lose their jobs or become ill for an extended period of time.
The danger the cancellations pose to a broker’s business is that when life and protection cover is purchased, depending on the insurer, typically the broker would get five-years' worth of the indemnity commission in advance.
But if the client cancels in the first year, the broker would have to pay all of the commission back to the insurer; with the amount reducing by percentages, over four or five years.
“So if we get a lot of cancellations we have to pay back all the commission, which could bankrupt a broker,” Mr Riach adds.
“People are thinking what can I cut out [now if there is a risk that] I lose my job, and sometimes it’s life and critical insurance. It’s the last thing they should do.”
Despite the uncertainty in the market, lenders are still lending, albeit at a much reduced rate.
And it is unlikely to remain at such a low rate for a long time as the industry commits to finding ways to adapt.
Recognising the clear challenges in a market that is a driver of economic growth, the PRA has also stepped in to cancel the 2020 stress test for the eight major UK banks and building societies.
This action is intended to help lenders focus on meeting the needs of UK households and businesses via the continuing provision of credit.
Lenders' business models is predicated on lending money and charging interest on it.
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