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Insurance boosts mortgage business

Adding insurance to a mortgage broking business has been good for national group the Kiwi Mortgage Market (KMM).

Friday, July 11th 2008, 12:27PM
KMM managing director Brian Greer says that he has tried to add insurance sales into the business for four years, but only started making traction with the change nine months ago. Since then, with the housing market slowing and banks cutting commissions, the life business has really started to take off he says.

Without life insurance the group would still survive, but it "wouldn't be worth our while."

He says life insurance makes KMM much stronger and will help it strengthen its position in the brokerage market.

Greer says some of the key differences are the remuneration levels and the attitudes of product providers.

With life insurance the remuneration is around three times higher than the mortgage broking business he says.

While insurance companies say that around 60% of mortgage deals should have a life insurance sale attached to it, KMM isn't at that level. However, Greer says the number is increasing strongly.

The other difference is that the life companies, such as Sovereign and AIG, bend over backwards to help the brokers sell policies as brokers are their main distribution channel. That is the opposite to banks who sell most of their home loans through their branch networks and have brokers as a third party distribution channel.

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