From ABR we constantly send out the message that having an insurance broker that looks for products and keeps customers updated about any change on the market that can benefit them, gives solutions and alternatives to improve the ones that they already have or new options to ensure recent needs that may come as the life of the customer changes is key to be certain, that not only that customer is properly insured, but also that his money is well
invested.
For that reason and to make ourselves even more clear, we want to share a practical example which is very common in Spain about what happens when insurances are used as a complementary side sell to make a selling bigger, without no other purpose than increasing the benefit of the seller.
Let us just have in mind a situation as common as buying a house or a property, something big enough to reach a bank and ask for a loan. Everything is going well, as it should be, but when signing the final papers, the buyer is told that, in order to finish that financial operation, he must as well, hire an insurance that will be (most of the times) included into the loan.
- At this point we can subtract the following conclusions:The banks link to the hiring of loans and mortgages the purchase of insurances
breaching, at least, three laws:
a. The General Law for the defence of users and consumers.
b. The Law for Insurance Brokerage of 2006.
c. The Law for the Defence of Competitors.
2. There is an alarming lack of transparency, since the customer is induced to buy the insurance in a context that gives no other option for the hiring of the loan.
3. Most of the people are told that hiring an insurance is a needed condition for getting the loan.
4. It is so difficult for the customer to check other options outside of the bank as they are not told that they have the option to do it, and for the pressure put on it at the very last moment of the process.
In the other hand, those practices have a very negative result for the customer, as those insurances are linked to the loan.
It is very important to know that insurances may change over time once you hire them (changes in the market, changes on the particular conditions of the buyer…). Therefore, as they are linked to a loan made to last for a long time, those insurances will not be updated; therefore, we can say as a fact, that they will be overpriced an average of a 79% more with sporadic increases of a 9% than the ones that a broker may offer.
Therefore, we will not get tired of stating this as many times as it is necessary: always ask for advise to experts before making any decision, and do not buy anything from anyone who is offering something out of their main product.