Leader: Time to be bold on IP

Protection is rarely given the same amount of airtime as mortgages but, in recent weeks, several high-profile industry names have waded in to the debate on improving take-up.

The so-called ‘protection gap’ – the amount by which people are under-insured – is measured in trillions, not billions, of pounds. There are passionate people in the market who have worked tirelessly for years to boost the profile of these products but, in all honesty, consumers today are as apathetic as they have always been when it comes to insuring themselves.

Last month, Association of Mortgage Intermediaries chief executive Robert Sinclair floated the idea of offering a rate incentive on mortgage products where the borrower has income protection in place – which this magazine supported.

Now, Pink director Mark Graves has gone a step further by calling for IP to be mandatory when taking out a mortgage.

There is a good chance many will view this as a ‘nanny state’-type idea and argue that it is up to the borrower to ensure they are adequately covered. But, as Graves points out, this is a “win-win-win” situation – for the lender, the borrower and the Government.

Of course, it would not be simple to implement because there are likely to be many things to take into consideration – but the overall concept is sound.

For too long the industry has been fiddling around the edges of the problem. Engaging consumers has proved extremely difficult, so a different direction is needed. Most people need a mortgage to purchase a home and a requirement to take out insurance to secure finance would not put borrowers off.

Now is the time to be bold and radical. The benefits are there for everyone to see.