Consumer compensation claims expected to hit all-time high
- 30TH JUNE 2007
At the moment, there are in excess of 25 million payment protection insurancepolicies in force. It is in fact assumed that there are upwards of 28 million policies that a whole host of banks and lenders are benefiting from at the moment. When you look at the figures it is not hard to see why when £5 billion of the industry’s £6 billion a year revenue is pure profit!
The payment protection insurance policy is a fantastic idea in itself. Having a policy that would enable you to keep up repayments on your debts should you be unable to work due to involuntary redundancy, long term illness or accident can really give an individual peace of mind. After all, we never know what is just around the corner.
Accidents, illness and unemployment via redundancy can actually affect us all at any given time and a lack of income could really dig a financial hole that may prove impossible to escape from.
It is not the idea of payment protection insurance that is flawed but rather the way policies are administered. In many cases they are extortionately expensive and often mis-sold to the point that only roughly 20% of policyholders are eligible to claim and do not get rejected out of hand.
As a result of this trend, the payout from compensation claims could actually run into £ billions. Simon Burgess from the ethical payment protection insurance provider British Insurance is extremely perceptive. He has said that: “If everyone caught in the payment protection insurance trap got the compensation to which they might be entitled, we anticipate that compensation payments could reach £10 billion. This will dwarf the huge sums already paid out to holders of failing endowments.”
