Sometimes I think I must live in a parallel universe where attempting to sell products that are designed to help people when they fall on had times is seen as a capital crime and the butchers of Srebrenica are held up as model citizens.
This persecution complex is fuelled by the assumption that hardly a week goes by without some investigation into my sphere of work, the protection insurance marketplace.
The latest spat to capture the headline writers’ imagination concerns customers being put under pressure to buy expensive cover that they don’t need.
What message is this sending out to both customers and the wider financial services industry? The creditor insurance sector insures all forms of regular payments including mortgages, loans, credit card payments and other financial commitments.
Let’s not forget that there are about 20 million PPI policies in force and around seven million taken out each year.
This insurance offers vital protection to millions of people in what is rapidly becoming a world where there are few guarantees.
Crucially, it also includes protection against accident sickness and unemployment. These are very important insurances, for pretty obvious reasons. There is a clear trend that borrowers will continue to experience payment difficulties. There is also a clear duty on intermediaries to warn of the dangers and offer solutions when arranging a mortgage or remortgage for their clients.
Increased take-up and security of cover is crucial as the economy moves onto less solid ground with the ability of homeowners to meet their mortgage payments being stretched by higher interest rates and rising inflation.
Insurance remains an important strand of protection against arrears and possessions.
With around eight out of 10 MPPI claims met in full, there is a very clear level of protection available against the risk of lost income, the most common cause of difficulties.
Intermediaries should not be dissuaded about the benefits of this cover by wider negative press.
Indeed it is incumbent on them to warn their clients of the pitfalls that awaits them should they find themselves in circumstances where repaying the loan to the lender becomes impossible.
Even the FSA concedes that when properly structured, explained and sold, payment protection insurance can provide worthwhile cover for consumers against unexpected changes in their personal circumstances.
And there are some great products in the market that offer the opportunity for the intermediary to open up a new revenue stream.
Even if you don’t want the bother of arranging the cover yourself, you can outsource the entire fulfilment process and regulatory responsibility to an external specialist wholesaler and still earn yourself some useful commission.
Aidan Plumridge is head of marketing and business development at Cassidy Davis
The views expressed in this article of those of the author and do not necessarily represent those of IFAonline or any other Incisive Media affiliated organisation.IFAonline
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