Official unemployment figures due out this week are expected to top 1.8m, the highest since 1998, and analysts are predicting this will increase to 2.7m by Q1 2010 – representing a jobless rate of 8%.
Sales of Mortgage Payment Protection Insurance, a policy that pays claimants’ mortgages in the event of accident, sickness or unemployment, are at an all time low – according to statistics from the Council of Mortgage Lenders and Association of British Insurers only 17% of people with mortgages have this cover.
Around 22% of homeowners taking out new mortgages in the first half of this year opted for MPPI, but this figure drops once the loan is in force. The current figure of 17% leaves 83% potentially exposed to financial hardship should redundancy occur which could result in repossession.
Sara-Ann comments: “Given the CML predicts home repossessions to soar to 45,000 by the end of the year and the FSA says 312,000 homeowners were in arrears by the end of June, you would think consumers would explore all options that provide some financial breathing space should their income be interrupted.
“Shelter has seen a 167% rise in calls to its helpline over the past six months – mainly from families seeking advice about repossession. Those with MPPI should be able to stave off this last resort - statistics show that over 88% of MPPI claims are accepted and the average length of a claim payment is around 170 days –so mortgages are being paid for nearly six months.”
Lack of consumer take up can be attributed to the poor reputation of the PPI sector – it has suffered numerous mis-selling scandals and lenders have become well-known for over-inflating premiums and saddling people with policies which cannot be claimed on. As a result, the consensus appears to be ‘have no cover and avoid being ripped off’.
However, independent providers are fighting to restore the reputation of this beleaguered sector. Despite only having a 1% market share, independents are outshining the larger players when it comes to their breadth of products, competitiveness and customer service.
In the last two weeks alone, independent provider, British Insurance has won six awards for its payment protection portfolio, scooping Best Overall Insurance Provider, Excellence in Treating Customers Fairly, Best Mortgage Payment Protection Insurance Provider and Outstanding Consumer Champion accolades from magazines and websites.
Sara-Ann concludes: “These firms are trying to salvage the reputation of this beleaguered sector and in doing so, helping to protect the financial well-being of thousands of people. Consumers do not have to pay over the odds for cover, British Insurance premiums are £3.90 per £100 of benefit for accident, sickness and unemployment cover and £3.40 per £100 for unemployment only.
“You would have thought that the number of MPPI policies in force would increase year upon year, but they’re not. Every week we’re given dire predictions of further job losses, stagnant wages and more forced house sales and it pains me to think that the repossession statistics could be reduced if more people considered MPPI amongst their options.”