MPPI baseline

MPPI baseline still needs improvement

Despite the work done by the Council of Mortgage Lenders (CML) and the Association of British Insurers (ABI) to improve the MPPI baseline, it still does not do enough to protect consumers, says an industry insider.

The MPPI baseline is a voluntary code which sets out the basic cover that consumers should be offered when buying Mortgage Payment Protection Insurance. It was introduced in the late 1990’s and its aim is to help improve confidence in the MPPI market.

MPPI provides homeowners with a financial safety net in the event that they cannot meet their mortgage repayments due to unemployment, accident or long tem sickness. A monthly tax free sum will help meet the mortgage costs as well as associated costs such as home insurance.

Concerns to be tackled included changes to specific policy exclusions as well as wordings of clauses. Also, the portability of policies was discussed.

However, says Simon Burgess from low cost payment protection provider BritishInsurance.com, while the changes set out by the two bodies are improvements, they still need to address the real concerns in the market.

“High excess periods on policies are a major concern. These need to be scrapped as these still leave consumers with a mortgage that is in arrears.”

Burgess cites his mortgage payment protection insurance product that, unlike many others, offers homeowners back-to-day-one cover. Subject to acceptance, claims are paid back to the very first day of a claim for benefit once the insured has been unemployed or disabled for a continuous period exceeding 30 days.

“If all lenders need removed the excess periods from their MPPI policies, it would be a positive step forward” he adds.