Rising cover rates reflect higher risk

Once again the protection sector has come under attack, this time from the self-appointed public guardians at Which?.

It was protesting at the fact that mortgage payment protection insurers were raising premium rates.

What the good people at Which? seemingly fail to comprehend is that insurance companies are businesses like any other and must make more money than they pay out so they can remain going concerns.

Just because someone took out a policy several years ago does not mean they are less likely to lose their job today and make a claim on their policy.

Premiums were set in much more benign times and the rates reflected the risk at that time.

These have now been adjusted to reflect the much harsher economic environment we find ourselves in.

This process is universally known as the insurance cycle and it occurs with car insurance, home insurance, and in fact every type of insurance.

Unfortunately, in today’s climate anything to do with unemployment is an emotional topic.

It is equally evident that this increased risk of unemployment needs to be factored into MPPI policy pricing.

Paymentshield, like other providers, has tried to keep these rises as small as possible.

If less time was spent scaremongering and more time geared toward educating the public about the need for protection, there would be fewer horror stories of home repossessions.