PPI finds favour on mainland Europe

Whereas payment protection insurance (PPI) has floundered in the UK market, on mainland Europe loan and credit card payment protection insurance is “alive and well,” reports research consultancy Finaccord.

Latest research confirms that across 20 European countries, these two types of insurance combined were worth around €10.84 billion in gross written premiums in 2011, slightly down from €10.91 billion in 2007.

However, while the UK market plummeted from €3.60 billion in 2007 to just €850 million in 2011 as most banks and other lending institutions withdrew their products, gross written premiums for loan and credit card payment protection insurance increased in the other 19 countries in Europe from €7.31 billion to €9.99 billion, a rise of 36.6%.

Given that banks and other lending institutions in continental Europe have continued to successfully sell payment protection cover, Finaccord wanted to know whether their selling methods were carried out in a more sustainable manner. 

Finaccord’s research found that France is the country that demonstrates and represents best practice in the selling of PPI and provides an example to other countries’ banking sectors as to how they should sell this product, as well as how the respective authorities should regulate it. French law stipulates that banks must clearly and explicitly inform borrowers that they may obtain payment protection insurance from a third party of their own choosing over and above the bank itself.

www.finaccord.com