Risk appetite still key to payment protection take-up

More than a third of respondents (36%) identified risk appetite as the single most influential factor in clients' decisions to take out MPPI.Other factors for selecting the insurance included: concerns over employment status (30%),past experience (13%), and whether or not clients were first time buyers (5%).

The findings illustrate mortgage intermediaries' views on MPPI sales five months since FSA regulation of general insurance. 81% say FSA regulation has not affected MPPI take up with clients, while 10% claim take up has fallen since the introduction of the Insurance Conduct of Business (ICOB) rules. Eight percent of respondents claim MPPI take up has increased in this time.

Commenting on the survey results Ben Stafford, head of policy at AMI, said: “It is the role of a good adviser to explain the financial risksattached with taking out a mortgage and explain how to mitigate these through a combination of options -some based on insurance solutions, others based on a client's own resources.

“At the root of this discussion is the "risk appetite" of the client. Theresults of the survey demonstrate the clear need for advice when taking out a mortgage -if only to protect the borrower if their circumstances should change for the worst.”

Recent ABI figures suggest the number of payment protection policies written has trailed off, with a 21% decrease in the number of new policies taken out between 2003 and 2004.

Stafford adds: “There are few occasions when borrowers are as grateful for the good advice they have received than when they have to draw upon payment protection. While conditions are benign for most homeowners, planning for the unexpected is absolutely vital."