As read in Mortgage Business– Last week’s announcement that a major bank has terminated its agreement with Genworth  Aust  could have a positive impact on the LMI insurer, one industry figure has argued.

Shares in Genworth fell sharply after Westpac’s decision to terminate its Lenders Mortgae  Insurance  agreement with the group following a strategic review of all of its lenders’ LMI arrangements for all new residential mortgage loans with a loan-to-value ratio (LVR) of greater than 90%.

However, according to Troy Phillips, founder of FirstPoint Mortgage Brokers, Westpac’s departure is likely to promote Genworth to review its business and identify alternative revenue streams.

“Genworth has been a really good supporter of this market for a long time, but the LMI industry needs to look at itself,” Mr Phillips told Mortgage Business.

“Losing a customer like Westpac could be a blessing for a company like Genworth,” he said. “They can look internally, they can look how they do business and they can look at other ways of doing business.”

Mr Phillips called LMI the “the biggest misnomer of all time” as the customer pays the premium, not the bank. “The customer doesn’t get to choose their LMI provider; it should be a freer market for mortgage insurance,” he said.

Mr Phillips believes that Genworth Aust will need to get closer to its customer going forward and consider a retail play.

“They do other forms of insurance in the US. They have a retail brand in the US. They need to get closer to the customer. They have a parent overseas that has done that,” he said.

John can be contacted on 0749722081 or 0410433919. or email him at jwhitten@ihl.net.au or net www.ihl.net.au. John Whitten is a credit representative (CRN 399796) of BLASSA Pty Ltd (Australian Credit Licence No 391237)