AXA-provided policy is raising prices while cutting payouts
The Post Office has raised its AXA-provided payment protection insurance (PPI) premiums and cut cover for mortgage protection customers who took out policies when they were less likely to be sacked, the Independent reports.
From next month, the maximum monthly cover will fall from £2,500 to £1,500 and the first payment will arrive not 30 days after redundancy, but 90 days. The £4.50 flat premium per £100 covered will be replaced by a premium, depending on circumstances, of up to £6.50 – adding hundreds of pounds a year to some policies.
The Post Office website says: “We are making some changes to Post Office Lifestyle Protection and will soon be launching a flexible new policy that can be tailored to meet individual customer needs.”
The Independent says other companies are also cutting their exposure to the downturn by taking advantage of a contractual clause which allows them to alter terms at 30 days’ notice.
The paper says: “The changes, which follow a 17% average rise in mortgage cover last year, are a fresh blow to the tattered reputation of payment protection insurance (PPI), which has been dogged by rampant mis-selling and excessive rates.”
The Independent says consumer group Which? accused the insurance industry of “moving the goalposts” for policies meant to protect employees against job loss and illness.
“It’s typical. They have been selling this insurance mercilessly for years and now people really do need it they cut benefits and increase premium payments,” said principal researcher Teresa Fritz. “We wonder if it’s a way of cutting the risk on their books by getting people to cancel.”
The Independent says:
- Norwich Union, has reduced its cover for unemployment-only policies and is also thought to have put up its prices.
- Marketing worker Alison Morrison, who lives in Kensal Rise, north London, was given 30 days’ notice by Cardiff Pinnacle of a 40 per cent rise in premiums – unless she reduced her cover by a third from £1,500 to £1,000 a month, which she did.
- Insurers have stopped selling new redundancy policies and toughened existing ones because of the increased risk of people claiming.
- According to the Association of British Insurers, the number of claims for redundancy cover more than doubled between November 2007 and November last year, from 8,772 to 19,105.
