Bozic: brokers need to embrace creditor insurance

Bozic: brokers need to embrace creditor insurance

As brokers clamour for more ancillary products from channel lenders, Boris Bozic is suggesting they’ve largely failed to capitalize on one available to them for more than a decade: creditor insurance.

“They haven’t grown that portion of the business because they haven’t focused on it,” the Merix Financial president and CEO told “It was introduced more than 10 years ago to brokers and they simply haven’t significantly built on the level of business they were doing then. I think it would be prudent to do that.”

The comments answer, in part, the growing call for broker channel lenders to deepen their product pool as mortgage originations slow sending brokers scrambling for ways to maintain, if not grow, their revenue streams. Industry insiders have also suggested that strategy as key for mono-line lenders now grappling with the triple whammy of tight spreads, growing competition from the banks – both in- and out-side the broker channel – and compensation obligations.

Banks have, in fact, been able to undercut mono-line rates in large part because of their ability to cross-sell a host of other ancillary products to mortgage borrowers, said John Bargis, head of broker network Mortgage Edge, pointing to credit cards, insurance and other banking services. Those offerings have freed banks up to offer mortgages as a sort of loss-leader, a luxury that those lenders all but limited to mortgages do not have.

While brokers are increasingly asking for more of those types of product offerings as a way of diversifying their own utility to clients and claiming ownership for themselves as well as broker lenders, Bozic argues that they simply haven’t demonstrated the willingness to hawk those wares, given that less than 25 per cent of their originations include creditor insurance deals.


Other channel lenders, pointing to lackluster credit card sales through mortgage professionals, back up his criticism.

Still, brokers are willing to expand their sales efforts for the right product, said Wayne Mah, a Vancouver broker and 16-year veteran of the rate wars.

“It really depends on the product and the lender,” he told “Offering Visa cards can be beneficial and I’m open to products from lenders who offer renewals because that demonstrates to me that in cross-selling on their behalf they will be inclined to share the client more so than the banks or lenders who don’t offer renewals.”

But, like some brokers, his interest in selling creditor insurance is limited.

“We’re not insurance brokers, although I know that creditor insurers are generally fair in terms of commissions,” he said. “But it’s more beneficial to me to refer clients to an insurance broker who is a referral partner. It strengthens that referral network and the business I get in return from the insurance broker is ultimately of a higher value than that I can get from arranging creditor insurance.”


That may jive with the observations of creditor insurance providers.


"Many reasons may be given," Kelly Price of Bensure told, "but one thing more than any other seems to hold brokers back when it comes to maximizing their revenue from creditor insurance. It's the prevalance of the view that it is someone else's job."

Other brokers are more ambivalent about the product itself, arguing their role as mortgage brokers effectively restricts them from endorsing a limited number of creditor and life insurance products -- those available through the broker channel.

That thinking comes at a cost, said Bozic: “If you have a moral dilemma relative to certain products then you have to accept that, that business is going to go elsewhere.”

  • Ottawa Broker 2011-07-22 3:45:22 AM
    Any broker that TRULY looks after their clients best interest would NEVER sell creditor insurance. It is a far inferior insurance product than even a standard life term policy. I refer all my clients to 3 different insurance/financial advisors. My clients have better insurance coverage and the business I get back from those 3 referral sources way exceeds any commissions paid on creditor insurance. No need to bring up the show Marketplace did 2 years ago on creditor insurance, not a good product.
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  • David Larock 2011-07-22 3:57:46 AM
    Brokers don't sell creditor life insurance because it's a lousy product:

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  • Paul 2011-07-22 4:10:01 AM
    Completely disagree with you Boris. You sell them creditor insurance which is paid on a declining balance with an institution you are now tied to if your health deteriorates over the term of your mortgage. Add to that, instead of receiving a lump payout in the event of a death, you have your mortgage paid off which may not be the first priority of the survivor. I woudl rather see my clients receive a lump sum, probabte fee, tax free. Selling creditor insurance in flawed and you are much better to refer on to a third party insurance agent.
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