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Daily Insurance Industry News
Friday 19th of January 2018
December 30, 2008

Consumers not keen on shopping around for PPI

by Gill Montia

Story link: Consumers not keen on shopping around for PPI

Proposals by the Competition Commission to ban the sale of payment protection insurance (PPI) alongside the sale of a loan or credit card do not meet with widespread approval among consumers.

PPI is intended to meet payments on personal loans should the borrower be unable to work through illness or lose their job and the Commission is suggesting the ban as a means of tackling widespread mis-selling of the insurance.

The financial services sector is strongly opposed to the suggestion, given that the industry generates huge profits from PPI premiums.

Research by MoneyExpert.com has found that the move could lead to fewer borrowers taking out PPI, when it could be of benefit to them.

In a recent survey, the price comparison website found that 67% of respondents wanted to be allowed to buy PPI when they sign up for a new loan or credit card.

One-fifth of those questioned said that not being able to buy the cover at the time they secured a loan would seriously deter them from taking out the insurance at all.

Under the Competition Commission proposals, a 14 day period would have to elapse before a customer could buy PPI from their loan provider.

Consumers could, of course, approach a different PPI provider during the period and the Commission believes this could encourage competition in the market, having estimated that consumers are being overcharged by around £1.4 billion a year for their PPI.

However, the research also found that 13% of respondents did not think they would have the time to shop around to get the best premium.

MoneyExpert.com director, Sean Gardner, agrees that the Competition Commission deserves support in its attempts to improve the sale of PPI but not if that means people missing out on insurance when they need it.

 

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