It’s the kind of validation brokers may be happy to do without. But one insurance provider is backing up their observations about slower, more-cautious clients, pointing to consistent broker demand for job-loss insurance even as the economy moves further out of recession.
“It's probably indicative of consumer concerns about employment and the economy,” David Young, president of Propel Insure told MortgageBrokerNews.ca. “But more to the point, it reflects the changing employment situation where we’ve seen job growth in part-time positions, with many workers being employed outside their chosen field. Both create uncertainty for them.”
The Halifax-based insurer was one of the first to put the job-loss product in the hands of brokers, and by extension their clients. Recent months have seen customers of the big banks approach Propel directly to take out the insurance. It covers a policyholder’s mortgage payments up to a maximum of $4,000 per month and up to six months while they look for a new job. It’s also gaining traction against the standard life, disability and critical illness policies in most U.S. markets, and now accounts for 20 per cent of Young’s growing book.
While Canada’s unemployment rate sank to 7.4 per cent in May, down from April’s 7.6, paid employment actually fell by 7,300 jobs as the number of self-employed rose. The complicated job market has only added to Canadian concerns around job security, say some economists.
Its job-loss product has helped Propel, launched last June, grow its market share across Canada, but especially in the West where much of its book is concentrated.
“As awareness builds we have more brokers positioning it as an option for their clients,” said Young. The broker channel has shared in those gains, with Propel boasting of the kind of portable coverage extending brokers and their clients the option of shopping the industry at renewal time instead of staying with one of the Big Five.
“Our no-clawback option for brokers is also expanding business,” said Young, “About 80 per cent of our new signups have been with the no-clawback option. It's been extraordinarily popular with our brokers, and given them the incentive to sell the insurance knowing that their efforts won’t be wasted if, ultimately, the client backs out.”
The new compensation model was launched in April and effectively does away with the possibility of a clawback by offering brokers 9.5 times the premium spread out over three instalments. While the industry standard has been for brokers to claim 11 to 11.5 times the premium up front, that payment is subject to a 100-per cent take-back if the client cancels the policy in the first 12 months or fails to pass a medical examination. All creditor insurance policies are, in fact, medically underwritten.
“There’s been increased broker interest in the program and in selling creditor insurance,” Young told MortgageBrokerNews.ca, “That reflects the an increasing desire on the part of brokers to stabilize their revenue streams as it becomes harder to source new deals.”
Still, some brokers are prepared to send clients to insurance brokers to get additional quotes before signing them up for the product they’re offering.
“I have seen life and disability creditor insurance become a very useful tool for many clients,” MaryAnn Guizzo, VP of The Only Mortgage Company Inc. in Calgary. “Job-loss insurance, depending on price has its usefulness, but as a good broker you should always offer the insurance options and then discuss them in detail and don’t hesitate to send them to get another quote.”