ABI wants to improve mortgage payment protection insurance market
- 5TH MAY 2007
In response to the ongoing investigations of the Financial Services Authority and Office of Fair Trading, the Association of British Insurers (ABI) has pledged that it will actively work towards a fairer payment protection insurance (PPI) market for consumers to benefit from.
Malcolm Tarling, an ABI spokesperson, has highlighted the need to improve the general understanding of payment protection insurance in order to ensure that every individual is fully equipped to decide whether or not the policy may be appropriate for him or her.
Mr Tarling also highlighted the fact that it is of high importance that consumers protect their debt, especially if they have the high level of debt that a mortgage would bring. Mortgage payment protection insurance (MPPI) can effectively give an individual a monthly income should long term illness or redundancy occur and make repayments on the mortgage impossible. It may just prevent consumers losing their homes.
Currently, mortgage payment protection insurance is sold alongside a mortgage, and in many cases is over priced and often unsuitable. Home buyers are more often than not unaware that they can shop around for the cover and purchase it as a standalone product. Many believe that they have to buy it from their mortgage lender and that it is compulsory.
The ABI says it is committed to improving competition in the mortgage payment protection insurance market so that the individual potential homeowner has a choice of protection.
This is already happening to a certain extent as independent companies like the ethical British Insurance are challenging the value of mortgage payment protection insurance offered by high street providers. British Insurance can actually save an individual up to 40% with their policies as well as ensuring that every customer fully understands the protection that they are getting for their money.
