Insurer’s mortgage protection blacklist
MORTGAGE INTRODUCER - 20TH APRIL 2002
Mortgage Introducer has seen a confidential list of 40 firms on a creditor insurer blacklist, which could mean that tens of thousands of borrowers are unaware that they cannot protection their mortgage against accident, sickness or unemployment.
The list of companies, which are apparently no longer eligible for unemployment mortgage protection insurance, includes some of the largest financial companies in the UK.
The confidential document is thought to have been distributed among interested parties and has been constructed by underwriters who have deemed the firms to risky to insure, however it is unclear how many insurers have seen or use the list. It is perhaps significant that only one of the 40 firms on the list was there before 11 September.
Simon Burgess, managing director of mortgage protection insurer, Burgesses, said: “I would think that all creditor insurers have lists of excluded occupations of companies thought to be too risky. Sometimes this is made accessible to other firms and sometimes not. You can buy into lists like this, which are organised by claims managers and underwriters from certain groups. It is basically a cartel of excluded occupations complied by interested parties.
With some of the latest firms in the UK listed, employing thousands of high net worth individuals, the news will be of concern to mortgage brokers whose clients are potentially employed by these firms.
Burgess said: “This type of list is significant because the government is talking about providing a safety-net and yet some people would unknowingly be refused protection.”
One of the firms on the list is the General Insurance Standards Council which is soon to be superseded by the Financial Services Authority. The GISC is the non-statutory organisation that regulates the sales, advice and service standards of its insurers or intermediaries who are involved in general insurance.
Rachel Maidment, communications officer at GISC said: “The practice of blacklists, if true, could be seen as just another underwriting criteria. It is really just a commercial decision and is not a breach of our rules in any way. The fact that GISC is on the list does not surprise me as it has a limited life, because it will cease to exist when the FSA takes over regulation in 2004.
However, not all providers use, or even know of such lists.
Mairi Craig, spokeswoman for Scottish Provident, said: “Scottish Provident do not use any such lists, and are not aware of any. We cannot discriminate against any individual employees anyway, because we don not ask who they work for until the claim stage.”
