FSA orders GBP 60 Million Mortgage Protection Insurance Repayments
More than a million UK householders are to get refunds on their recent mortgage protection insurance monthly payments, after the City watchdog, the FSA, forced PPI providers including giant firms such as Aviva and Abbey; to pay back over GBP60 million in increased
Mortgage Protection Insurance premiums, which were slapped on already cash strapped mortgage borrowers earlier this year.
Over 2.1 million UK consumers have policies to repay mortgages and loans with accident, sickness and unemployment insurance attached.
The major UK money lenders have had over 10 years of collecting premiums on inflated house prices, with very few claims. But with claims now rising due to the recession, they've been recently hiking up the rates on many of these policies to maintain their profit levels.
The Financial Services Authority (FSA) and
Mortgage Payment Protection Insurance (MPPI) firms have agreed an industry-wide package of measures for consumers, including refunds of around £60 million.
The industry has acted in response to FSA concerns over recent increases in premiums and reductions in what customers are covered for under their policy. The FSA’s concerns centred on the terms permitting these changes, and how clearly they were disclosed. The FSA expects its concerns to be addressed by the agreement reached.
Following discussions initiated by the FSA with relevant trade bodies and some firms, the industry has responded positively by agreeing to:
• proactively refund increases in premiums, and reverse any reductions in cover, for customers who have experienced these changes to their policy in 2009;
• offer to reinstate policies where a customer had cancelled it within two months of an increase in premium or reduction in cover made during 2009;
• freeze premiums and cover for existing customers for at least the remainder of this year
• amend Mortgage Protection Insurance contracts to ensure that all customers are made aware of the circumstances in which firms have the right to vary premiums and cover.
New contracts will mean customers get a fairer deal with two months' notice of any changes to enable people to
compare mortgage protection insurance products and switch mortgage protection if necessary.
Jon Pain, managing director of supervision at the FSA, said:
"The FSA welcomes this positive move by Mortgage Protection Insurance firms to reverse recent changes in premiums or cover which will put affected customers back in the position they were in before the policy was changed. It will also give all MPPI customers clarity about when and why firms will be able to vary these in future.
"This clarity will provide the basis for MPPI to remain a valuable option for many mortgage customers who wish to take out protection, alongside the mortgage commitment they are taking on."
The affected companies will contact customers if their policy is affected, and will make all refunds by the end of June 2010.
The Consumer Panel has also welcomed the announcement today of FSA action and an industry-wide refund on Mortgage Protection Insurance.
Adam Phillips, Chairman of the Financial Services Consumer Panel, said:
“This is exactly what a financial regulator should be here for and we applaud the FSA’s action. It cannot be right that firms change the terms and conditions of an insurance policy just as times get hard and when people are more likely to try to claim on it.
We note that this agreement is to freeze premiums and cover for existing customers until at least January 2010. We will be watching to see how the FSA ensures
Mortgage Protection customers continue to get a fair deal beyond this date. Significant changes to cover go against the whole principle of why people pay for insurance and undermine consumers’ trust in the industry.”
Labels: fsa, FSCS, mortgage, mortgage insurance, mortgage payment protection, mortgage payment protection insurance, mortgage protection, mortgage protection insurance, mppi, UK government
Selling Your Insurance Broker Business? There's never been a better time to sell!
Selling Your Insurance Business?Despite the recession there's never been a better time for selling your insurance business with demand and consequently prices high.
Agglomeration of books of business and size are still driving factors when it comes to negotiating commission levels with the big Insurance companies. It's also sale time in the overstretched re-imnsurance sector at the moment!
Kris Oldland looks at the options for
Insurance Brokers in the UK who might be thinking of selling their businesses...
The Most Important Deal of Your LifeYou have spent the majority of your adult life working hard and slowly nurturing your company to a position of strength. Your reputation as an honest and efficient business person is a proud reflection on your work and the fact that many of your long standing clients are now trusted friends is testament to this. So how do you put a price on your life's work and can you really walk away knowing that the business will be in safe hands?
When considering selling, it is vital that you establish a clear cut succession plan to ensure that you receive the correct financial reward for your career's work. It will take time and careful consideration to find the option that works best for you and there are plenty of questions to be raised before you choose which path is best for you.
In practice there are six main options for those looking to pass on or sell their business. Of course each situation is different and often a compromise between these will be required. However as a general rule at least one of the following scenarios will fit with most acquisitions within the broking sector.
Possibly the simplest option is to persuade your fellow directors to buy you out. This can often be agreed quickly and without too many problems as you are dealing with people whose trust and understanding you have gained over the years.
The integrity of the business remaining unaffected and the lack of disturbance on your client base and staff are also great advantages.
However, this form of buy out is dependant on finance being readily available to the remaining members of the board so it is not always viable.
Alternately an individual could sell their shares to an external third party.
There is some risk in this as the wrong person coming in could cause difficulties with the remaining shareholders.
The flip side however, is that if the right person comes on board then they can add an injection of new ideas and fresh life into the business propelling it forwards.
A long term strategy is to train an existing employee with a view to taking over the reins.
This offers the prospect of instilling your existing values into the next generation of your company and goes some way to ensuring a legacy; however the obvious pitfall is the realisation of capital.
Unless your protege has substantial personal wealth or you are a very generous employer, will they have the funds necessary to step in and buy you out when the time comes?
If all shareholders are in agreement then selling up to another firm is a common choice, but how will working under a new regime impact upon those that stay on?
Can those members of the board that stay adapt to less business-critical roles so easily?
Without the full backing of all the shareholders a successful deal cannot be agreed so negotiations need to reflect the needs of those who will remain as much as those who are looking to leave.
The final option is to face up to facts that liquidation may bring in more revenue than selling the company as a going concern.
If the business is turning over just enough to stay afloat but retention rates are not sufficient enough to attract a reasonable offer, it may be that the equity tied up in assets such as cars or property may be more profitable sold on their own. Again the decision to wind the company down is one not to be taken lightly as the welfare of your staff also enters the equation once again.
Ultimately you need to think carefully about the exit strategy that fits with your own thinking and how you wish to see the business develop once your gone.
The most desirable strategy may not be available to you and of course market conditions and levels of third party interest is always going to feature highly in how you leave your business and the value you are able to realise for it.
For any seller, it is essential to find a suitor that you are comfortable with so you can be confident that the new corporate culture will sit well with the way business has been run traditionally. It may be the last deal you make, but be prepared to do some serious work on this one as quite simply; it is the most important deal of your life.
Insurance Aquisition and Mergers specialists Insuretec agree........
LARGE DEMAND FOR INSURANCE BROKERAGES IN THE SOUTH EASTIf you’re a insurance broker or agent in the City, Home Counties, Sussex, South East or South West England........
Then now is the time to sell.The demand for brokerages and books of business has never been so good.
Whether it be the cash rich regionals who are looking to grow or extend their regional capabilities or brokers looking to extend their strategic position or simply to purchase quality accounts and schemes to bolster their ever growing books of business, the demand is enormous.
The huge demand for brokers in these regions leave the price of selling at a stable position.
Yes, there are always people looking for a bargain and using the present credit crunch to squeeze the price down, but the demand for quality accounts has never been so good.
A good quality book of commercial insurance business or high net personal lines in the required sector is always worth selling.At the end of last year we saw a slow down in businesses for sale.
Why? The buyers were still there?
Just not the very few larger organisations who decided to close their doors to acquiring.
Regional brokers and UK brokers who had structured their businesses well were still trading and still looking to acquire and still are.
We have also seen more businesses looking for schemes and blocks of specific business eg property owners, marine, credit,hauliers.
We have also seen the increase of more overseas companies looking for uk brokerages to place their uk clients and to extend their insurance market relationships.
These work very well for brokers who need to take the business to the next stage but do not have the investment to do that.
Their everyday job can remain stable, although on a wider basis and normally part of something larger.
At the end of the day if you have decided that you do not want to be in the industry anymore, then selling is your best option.
There is no price for the freedom of doing something that you want to do.
For a free service if you are considering selling visit
Insurance Broker Sellers or speak directly with Chris Coates on 07801 329242
Labels: acquisitions, books of business, Insurance, Insurance Agents, Insurance Brokers, Insurance companies, mergers, selling
