Does the renting cloud have a silver lining for advisers?

It seems that financial protection only enters the minds of the public at the point when they think they need it – usually prompted by a significant life event, for example; buying a house, getting married, having children or perhaps establishing a business (and/or a discussion with a finance professional!).

Yet professionals in the protection industry, advisers and mortgage brokers may be faced with a new challenge – the emergence of The Generation Renter.

Many young (and perhaps not quite so young) people are increasingly unable get even one foot on the housing ladder and certainly not without substantial input from the Bank of Mum & Dad / Nan & Grandad. Recent research from Halifaxsuggests that 45% of parents have or are planning to contribute towards a deposit to help their children buy their first home.

The Independent recently carried a warning from housing charity Shelter that it might take young couples who decide to have children before they buy, double the number of years to raise a deposit than those who waited until they were property owners. They suggest it could take 12 years rather than six. Shelter’s other bleak assessment is that it might take a long term singleton 30 years to raise a deposit.

So we have the statistics to support what we already know; that people are renting for longer and as the housing market roars ahead, some families who would have been able to buy a decade or so ago, may even have to rent for good. The latest Census figures from the Office of National Statistics show that one in five families in England now rent from a private landlord.

This is a huge challenge for the protection industry because the industry loses one of the most significant client contact points; one which advisers and mortgages brokers would traditionally use to recommend protection.  Now it comes a lot later in their client’s financial lives (and as a result can be more expensive for them).  Yet, while it is obvious why their clients’ minds are concentrated on financial protection when they purchase a property (and they have more to lose in terms of assets if they can’t make the mortgage repayments), there is still a case to be made for renters to protect their income – and especially those renters with children.

Protection provider LV= conducted research on the market for renters and protection policies and unearthed that only 3% of renters have income protection, 4% critical illness and only 18% hold life cover. These figures hold true for a mixture of single people, couples and families, as couples and families make up 60% of LV=’s sample.

There is still a definite client need for financial protection so with some new thinking, is there a way to buck the trend? The trend may not be the industry’s friend at the moment, but with fresh thinking perhaps the protection industry can do something about it.

To do so though, insurers and advisers needs to think of new ways to reach people, to find ways to create new contact points perhaps working with landlords and lettings agents and to devise new ways to present the case for protection. At Space 01, we intend to foster a little bit of a debate about this on our blog site in the next few weeks and months.  Click here to get the Space01 blog straight to your inbox.

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