The base line specification for mortgage payment protection insurance (MPPI) needs urgent revision, according to Steve Devine, director of corporate communications at Pinnacle Insurance.
Speaking at The Mortgage Event in Bolton, he said that within the context of sustainable home ownership, MPPI has a poor image when it comes to value for money.
He said it is seen as a crude and limited measure by many advisers and has had little or no advertising aimed at the public.
Devine proposed that: ‘A more financially-aware borrower could possibly have the minimum base line specification taken away, thus allowing a more tailored package.’
He added that there was a chance regulation by the FSA and forthcoming insurance directives from Brussels could increase the cost of distribution and force some insurers out of the market.
The base line specification for MPPI was launched in 1999 by the Council of Mortgage Lenders (CML) and the Association of British Insurers (ABI). It was intended to improve transparency and simplicity of MPPI, so borr-owers can understand what protection they are being offered and how insurance can benefit them.
The two organisations still meet regularly to discuss improving the way in which MPPI is sold, to set targets for MPPI and monitor progress.
However, Bernard Clarke, communications manager for the CML, said: ‘We have regular meetings with the ABI as part of the sustainable home ownership initiative. But I am not aware the base line specification was on the agenda, and I am not aware of any plans to change it.’