Burgesses slams Mortgage Payment Protection Medical exclusion practices
FINANCIAL ADVISER - 22ND APRIL 2004
Attacks on Mortgage payment protection insurance lenders have resumed, with insurance brokers criticising pre-existing medical exclusions in some policies.
Burgesses, the insurance arm of Burgesses group, has conducted research that showed many mortgage payment protection insurance policies were non-transferable between lenders.
Results also revealed that many had in-built pre-existing medical exclusion clauses that would exclude medical conditions that existed within 12 months of the start date of the policy. Simon Burgess, managing director of Burgesses, said: “It is a shocking and outrageous reality that lenders policies are non-transferable between mortgage-providers.
I believe the only reason for this is to tie their most vulnerable borrowers into financial arrangement that often other poor value of money.”
Thousands of mortgage holders who suffer from pre-existing medical conditions were effectively being trapped into unsuitable, and often expensive protection policies, Burgesses said.
The research, along the lines of a mystery shopper exercise, showed that independent mortgage payment protection insurance brokers were in a position to offer policies without a pre-existing medical exclusions and often at lower prices.
Of the high street providers surveyed, Cheltenham and Gloucester were shown to impose the highest premiums, with the cheapest provider, Bradford and Bingley, still more costly than independently provided cover.
Simon Burgess said: “Pre-existing condition exclusions are wholly unsatisfactory because one is effectively underwritten at the point of claim. Having a new exclusion each time once changes one’s mortgage exacerbates this further. The key is to make sure you buy a portable policy at the outset.”
Burgesses research showed the average cost of mortgage payment protection insurance to be about £5.78 for every £100 of cover from high street providers, compared with £3.95 from independent brokers.
