Skewed image overshadowing real value of PPI
Before credit crunch 60% of claims were for accident & sickness - not unemployment
Threat of job loss will pass but likelihood of accident & sickness remains constant
Thousands of consumers saved from financial difficulty by AS protection
A MASSIVE 40 per cent* of payment protection insurance claims over the past 12 months have been for accident and sickness, according to independent PPI provider Paymentcare.co.uk.
But borrowers who shun PPI because of the recent negative associations with failed claims for unemployment could be putting themselves squarely in risk's way.
"The statistics make it quite plain - PPI has protected the financial security of a huge number of borrowers who have lost their income through unpredictable accident or sickness," said Paymentcare.co.uk MD Shane Craig.
"Before the credit crunch the ratio of AS** claims compared to those for unemployment was 60:40 and when the economy stabilises and job security returns, I expect this pattern to return.
"Borrowers will cease to be so threatened by job loss but the chances of becoming ill or having an accident will remain the same and if they've decided not to bother with protection they could find themselves in trouble."
PPI as a personal finance product has been widely criticised over the past year since the Competition Commission investigation into mis-selling exposed bad practice amongst mainstream providers.
With this coming at the same time as the credit crunch and a huge wave of redundancies, the image of PPI has become seriously distorted.
"This is a false impression that could put borrowers at risk," said Craig. "The statistics speak for themselves. Protecting yourself against unemployment and redundancy is just one reason to sign up for PPI. Being unable to work because of accident or illness is something that no-one can predict and can be equally financially devastating."
The most recent figures for annual road accident casualties stands at nearly a quarter of a million*** and at the end of 2008, around two million people in the UK were diagnosed with cancer**** - a massive rise from the previous figure of 1.2m and clearly on an upward trend.
"These figures represent real lives affected by unforeseen events. Those who were unable to work as a result are very likely to have found themselves in financial difficulty," said Craig.
"No matter what state the UK or global economy is in, people are always going to have accidents or become unwell " and if they have loan or mortgage repayments to keep up but no income, they are going to be in trouble.
"As an independent provider of PPI we have always provided monthly paid policies at realistically affordable prices. We always establish customers' eligibility before accepting their application, our terms and conditions are easily accessible online for customers to read in full in their own time and unlike PPI bought from a lender along with a loan, there is no connection with the loan provider."
* Source: Adminicle, May 2009
** Accident & Sickness cover
*** ONS figures for 2007
**** Macmillan Cancer Support