Moneyfacts.co.uk says that despite the Office of Fair Trading investigation, Payment Protection Insurance prices are continuing to rise, adding insult to injury.
Michelle Slade, personal finance analyst at Moneyfacts.co.uk, says: “With PPI currently under the OFT microscope and being seen as an ‘overpriced, inflexible’ product, you may have thought lenders would be reluctant to rock the boat further.
“However as the moneyfacts.co.uk survey shows, for many providers the price has continued to climb over the last year.
“Although the average cost of personal loan PPI has not changed, there have been some hefty changes in premiums from a number of providers. “
Moneyfacts.co.uk research shows that prices from Direct Line, Lloyds TSB, Alliance & Leicester and Liverpool Victoria have risen over the past year.
She adds: “The cheapest cover for a £5,000 loan over 36 months still remains around £14, and the most expensive at £35.
“This means by choosing a loan with the most expensive PPI could cost you as much as £756 more over the three-year term.
“Also because your insurance premium will be added to the amount borrowed, the total amount payable can fluctuate further still, depending on the interest rate you are charged.
“While it can not be disputed that insurance against, life, accident, illness or unemployment can prove invaluable in some circumstances, the downside is the cost, inflexibility and the sales process associated with loan PPI.
“The huge profit margins on PPI are illustrated further by the fact that independent providers, such as Paymentcare.co.uk, British Insurance and the Post Office, can offer the same cover at a fraction of the price.
“These can offer savings of between £500 and £1200 compared to the policies offered by the loan providers.
“It is right that PPI is under investigation for its ‘rip off’ pricing and unfriendly features and practices – so an increase in its price is just rubbing salt into an already very deep wound.”