Review: General Insurance
The best defence is careful due diligence As reported by Mortgage Introducer in July, the government is appealing against a ruling by the High Court earlier this year that the Right to Rent scheme breaches human rights law because it causes racial discrimination. The ruling came following a judicial review of the policy secured by the Joint Council for the Welfare of Immigrants (JCWI) and supported by the Residential Landlords Association (RLA). The judge concluded that discrimination by landlords was taking place because of the scheme. Under the Right to Rent policy, private landlords face potential imprisonment of up to five years if they know or have “reasonable cause to believe” that the property they are letting is occupied by someone who doesn’t have the right to rent in the UK. The type of tenant is one of the main underwriting criteria on a Landlord’s insurance policy. Insurers only accept certain tenancy types
Geoff Hall chairman, Berkeley Alexander
IPT – grossly unfair HMRC has been seeking views on how to make the collection of Insurance Premium Tax (IPT) fairer and the consultation with the insurance industry closed on 17 July. We eagerly await the findings. IPT unfairly penalises those who want to protect themselves and their property – by imposing the tax in the first instance, the government has effectively deemed insurance to be a luxury purchase rather than an essential buy. Surely insuring your home and contents should be regarded as an essential, as should protecting your income if you are unable to work – think of the burden that would fall onto the state if no-one insured their property/income. Having said that, IPT is here to stay and likely to rise to the same level as VAT at some stage in the future. There has been a call from some quarters to change IPT to VAT. That would allow VAT registered businesses to claim that tax back, but it would cost the government significantly, so that’s unlikely to happen.
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(working person/family, benefit assisted, students, etc) so if an insurance policy is in force on a property occupied by someone not entitled to be in the UK, as by default that person is not working legally in the UK or entitled to receive benefits or be a student, the landlord will not have told the truth to his insurer. That would mean the policy would be invalidated in the event of a claim, even if the claim were a valid one. David Smith, policy director for the RLA, was quoted as saying that, “The Right to Rent scheme…has created a great deal of anxiety for landlords who do not want to go to prison for getting it wrong.” Whilst an insurance policy can provide some level of reassurance for innocent landlords who might fall foul of this policy, clearly the first line of defence should be careful due diligence and checks at the point of tenancy application. Landlords currently aren’t required to do credit checks, and nor should they be held responsible for policing the rights of the individual to be living in the UK, but most responsible landlords and letting agents will do these as part of good business practice.
It’s a people thing… We live in a world where technology is making new advancements every day to make our lives easier and our businesses run more efficiently. It is of course important to embrace change and be open to new and better ways of working, but let’s not lose sight of the fact that good old fashioned values still matter. Broking is and always will be a people business and it would be fatal to forget that. Ultimately people do business with people they like and trust, especially in our industry. The machines facilitate transactions, and may offer attractive top line incentives, but human relationships are the glue that binds business together. You should look to partner with and build relationships with consistently well-run businesses. Aside from financial success, a good indicator of that, I believe, is the people – from the senior management team through to the staff at the front end. Look at the attitude of the senior management team – are they people who give a consistent message and people you can trust. What is the firm’s retention record like - does it retain, and more importantly hold on to its talent? If it attracts and retains its staff, then that’s a clear indication of the quality of its management and that it is a well-run business. Technology will increasingly play an important role in broking, as it will in every other sector of business and society, but in good times and bad it is those we trust and have built long term relationships with that we turn to. Humans have evolved to trust their ‘gut’ when it comes to making friends and personal alliances and there’s a lot to be said for ‘gut feeling’ in business too – we don’t partner with companies; we partner with people. www.mortgageintroducer.com