Defaqto warning of price hike follows rises as high as 170%
Brian Brown of research firm Defaqto says payment protection insurance (PPI) premiums will rise by 50%, following price hikes of 170% in the past 12 months, The Times reports.
Following the Post Office’s move to change its Axa-written policies, more insurers will cut payouts, increase monthly charges or cancel cover for existing customers with as little as 30 days' notice.
The Times said: “The industry has been hit by a ‘perfect storm’ of soaring claims, a slump in customers taking out new policies alongside loans and increased pressure from regulators.”
Association of British Insurers (ABI) figures indicate that the number of PPI claims related to redundancy jumped from 8,772 in 2007 to 19,105 last year.
Brown said: “Providers and distributors are facing intense pressure from all sides. It is certain that the cost of new policies will continue to rise and there is a good chance other insurers will follow the Post Office and amend the terms for existing customers.”
Lucy Widenka, of Which?, the consumer association, said: “Customers have paid for PPI during the good times, so you would expect insurers to pay up when the worst happens and someone loses their job. Instead, insurers are rushing to change terms at just 30 days' notice to reduce the cover or increase payments.”
Unemployment cover for new customers from standalone PPI provider British Insurance has risen by 170% in the past year, The Times said.
Malcolm Tarling, of the ABI, said: “If the economy continues to deteriorate, every insurer will have to look at the viability of the cover offered to customers. Individual providers will look at the terms and conditions of the cover offered to customers and consider their options. The cost of any insurance products should reflect economic circumstances.”