Play the Mortgage Payment Protection Insurance game, or else
MORTGAGE INTRODUCER - 20TH APRIL 2002
While the Council of Mortgage Lenders the government and the Association of British Insurers have been working hard to raise the awareness of mortgage payment protection insurance among consumers, it seems that certain players in the market have not been playing ball.
Mortgage Introducer has seen a confidential list of 40 companies on a creditor insurer blacklist compiled by underwriters, who have judged the firms to risky to insure. The list includes some of the largest firms in the UK employing thousands of borrowers, which could mean that many are unaware that they cannot protect their mortgage against accident, sickness and unemployment.
Simon Burgess, managing director of mortgage payment protection insurer Burgesses, says: “This type of list is significant because the government is talking about providing a safety net and yet some people would knowingly be refused protection.
The news of the blacklist comes just weeks after the government announced that it has cut spending on benefits by extending the qualifying period for state help with mortgage payments to 39 weeks. The CML has blasted the decision, warning that the full impact of the reform is yet to be tested by a significant economic downturn. At the time, Peter Williams, deputy director general of the CML, said: “the government, lenders and insurers much continue to work together to create fully sustainable home ownership.”
With economic uncertainty, cautious decision-making by underwriters should be welcomed, and as Rachel Maidment, communications officer at the GISC points out, blacklisting certain companies is a commercial decision and not a breach of GISC rules in anyway. But the existence of this blacklist is a clear sign that “working together” is unrealistic if some parties are unwilling to participate. While sales of mortgage payment protection insurance has indeed increase, due to better products, pricing and awareness, let’s hope the hard work by the industry CML and ABI doesn’t now start to unravel.
