Thursday 12th June 2008
The Association of British Insurers has warned that restricting the sale of payment protection insurance (PPI) could leave many consumers without cover.
According to spokesperson Kelly Ostler-Coyle, many Britons would be unlikely to seek cover from elsewhere if PPI were not offered at the time they took out a loan or mortgage.
She explains: "A lot of people dont think of their protection needs other than when they are facing a big life event."
However, she concedes that some people do have their own provisions in place to cope should the worst happen, while others may simply not find PPI to be the best solution for them.
The comments come in light of a report from the Competition Commission, which asserts that PPI sold at the same time as loans or mortgages is typically not subject to the same levels of competition as that on the open market.
Because of this, the organisation suggests that Britons are paying in excess of £1.4 billion each year more than they would on the markets most reasonably priced products.
With about 14 million PPI policies currently in circulation in the UK, the commission adds that the vast majority were sold at the same time as the lending.
Customers are therefore generally unlikely to compare prices in order to find the best deal, the report concludes.
Ms Ostler-Coyle notes that "it does take time to shop around".
"Some people would like to do that, while others would like the convenience of buying it with the loan," she contends.
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