Mortgage insurance customers could face 40 percent increases
A recent report has highlighted how millions of working homeowners could be facing a whopping 40 percent rise in the cost of insurance cover that they took out to make their mortgage repayments in the event that they were unable to make repayments themselves for a period of time due to illness, accident, or redundancy.
Insurance companies have said that they are being forced to increase the cost of cover for working homeowners because of the steep rise in claims from homeowners who have been made redundant as a result of the recession.
March saw unemployment levels reach their highest in twelve years, with two million people claiming Job Seeker’s Allowance. According to the Association of British Insurers there has been an incredible 200 percent increase in mortgage insurance claims recently. In December of 2007 there were 6,611 claims made. However, in December of 2008 this shot up to 20.063. In total there are over two million Mortgage Payment Protection Insurance in force.
A number of insurance providers have already announced their hikes, and so far the level of the increase has reached 40 percent. It is thought that all MPPI providers will now have to increase the cost of cover to cope with the financial losses resulting from the rising number of claims from those being made redundant, and this will mean added costs for homeowners that are already struggling to make ends meet.
One insurance broker said: ‘There is no concept of loyalty with some of these companies and no recognition of the money you’ve already paid in. I can understand why premiums should go up for new customers, but someone who’s been paying in for years should not be penalised and treated the same as a new customer that has come off the street.’
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