Archive for Unemployment Insurance

Mortgage Companies Attempt To Avoid New PPI Misselling Rules

The availability of mortgages at all levels is essential to kick-start the failing housing market and the industries that rely upon this, from construction to those selling white goods or home insurance. Without readily available and free flowing capital, the UK economy will self implode.

However it now appears that the ‘not so ready to lend’ lenders, principally the banks and building societies who caused the mess in the first place, are now restricting the capital flow further with the provision of ‘new’ products designed to protect their capital and circumvent the recent legislation outlawing the selling of PPI (Payment protection insurance) at point of sale of the loan or mortgage.

Fortunately both the FSA and consumer watchdog , the OFT (Office of Fair Trading) have been keeping a close eye on these activities and have today issued a joint statement warning the providers of these products to obey the rules or face the consequences. Both UK Government organisations are determined that another PPI mis-selling scandal should be avoided as new mortgage protection products emerge.

The two quangos have joined forces on proposed guidelines to lenders in relation to new PPI type products, the responsibility for which can fall within either regulator’s area of operations.

The statement emphasises that now is a key time to reinforce the regulations as the insurance market shifts away from PPI and providers begin to develop new products or product features.

Under particular scrutiny are short-term income protection marketed as debt freeze or debt waiver when included with a credit or loan agreement or mortgage.

Some of the payment protection products that the FSA and OFT considered during the preparation of this proposed guidance are:

Insurance. This includes short term income protection or ‘STIP’, an insurance contract which provides a pre-agreed amount to the policy holder if they experience involuntary redundancy or are incapacitated through sickness or as a result of an accident and may be combined with other forms of insurance cover or include other benefits, and which:

o has a maximum time-limited benefit duration;
o is written for a term which is less than 5 years and not predetermined by the term of any credit agreement or RMC; and
o can be terminated by the Insurer.

Non Insurance the creditor agrees to freeze or waive the requirement on a consumer to make periodic repayments, or to freeze or waive interest or other charges, when a specified ‘event’ occurs, such as sickness or unemployment.

Insurance products are regulated by the FSA under the Financial Services and Markets Act 2000 (FSMA). Non-insurance protection linked to a regulated first charge mortgage contract are also regulated by the FSA. Non-insurance protection linked to a credit or hire agreement (including a second charge mortgage) will typically be regulated by the OFT under the Consumer Credit Act 1974 (CCA).

The two organisations will continue to monitor developments in the market, and will take appropriate action under their respective powers where products or practices risk causing detriment to consumers.

The FSA’s guidance stresses that firms should ensure that product features reflect the needs of the consumers they are targeting.

Margaret Cole, FSA managing director, said: “This is the first time that the FSA has issued guidance on the design of a specific product. Firms must learn the lessons of the past and make sure they have consumers’ needs at the heart of new product development.

“That is why we are acting early to ensure firms understand the risks they should bear in mind when designing these products, and how they can manage these risks when developing or distributing the product.

“The FSA cited new forms of payment protection products as an emerging risk in its Retail Conduct Risk Outlook earlier this year, and we are following up on that warning.”

The OFT’s guidance sets out how the OFT considers the Consumer Credit Act applies to payment protection products such as debt freeze or debt waivers linked to a regulated credit agreement, and what firms can do to ensure compliance.

In particular, firms should ensure that consumers are absolutely clear about the nature, price and implications of payment protection products.

For example, if an agreement is offered with an option to choose debt waiver terms, on payment of a fee, it may be necessary to provide financial information including and excluding the cost of the debt waiver.

The guidance also sets out examples of business practices in relation to payment protection products which the OFT is likely to regard as unfair or improper (whether unlawful or not) and so may cast doubt on fitness to hold a consumer credit licence.

David Fisher, the OFT’s Director of Consumer Credit, said: “It is important that the problems encountered with mis-selling of PPI do not arise in relation to new payment protection products.

“Firms need to ensure that they comply with relevant legislation and do not engage in unfair or improper business practices. In particular, they should make clear to consumers what they are signing up to and how much it costs, so that they can make properly informed decisions.”

The consultation will be open for ten weeks, closing on January 13.

With unemployment threatening to reach record levels as the public sector shrinks, it is essential that consumers can purchase protection against accident sickness and unemployment when they commit to a mortgage or large loan. Mortgages must be made easier to obtain and mortgage protection products available to alleviate some of the risks involved in lending for both parties.
There are many established independent specialist companies out there who offer insurance at much cheaper rates than the loan or mortgage providers. Maybe one solution to this ongoing saga would be to outlaw totally the provision of cover for debt by the debt provider and its subsidiaries however they want to dress it up in fancy wordings.

Unemployment Insurance – Last Chance For Public Sector Employees

Unemployment has risen to over 2.5 million in the UK and with the future of many public service workers jobs in doubt, is expected to rise to levels of over three million by Christmas.

Todays official figures show levels of unemployment last enjoyed under Margaret Thatcher’s Tory Government of the Eighties.

Youth unemployment is at its highest level for 19 years.
Womens unemployment is at its highest level for over 23 years.
The public sector is traditionally a large employer of both these groups.
The Governments argument that the private sector creating new jobs will prop up the public sector has proven to be widely inaccurate.
David Miliband pointed out that for every two jobs lost in the public sector only one was being created in the private sector.

The result is that the economy is in a downward spiral and the public sector job cuts are fuelling the maelstrom.
Maybe our public schools are failing as well, because it is obvious that neither David Cameron or the Chancellor bloke, whose name Insurance Blog can’t remember, have even the basic skills in macro economics!

When there was a global depression in the USA in the late 1920′s, FD Rooseveldt’s ‘New Deal’ of public works and public sector employment, brought America out of the downward spiral and introduced infrastructure which gave the post war US a massive competitive advantage.
President Obama has finally realised that cuts don’t work and has announced a massive Federal investment in public works. Alex Salmond, Leader of the Scottish Parliament today said that unemployment was down in Scotland during the last three months due to a large public building program.

David Cameron is carrying on making people and public sector workers unemployed.

If you work in the Public Sector there is still time to get unemployment insurance and income protection however you must hurry.

Income Protection Insurance is available to eveyone in full time employment. As long as you have not been informed by your employer that your job is at risk, you can still take out an income protection policy.

Act quickly and you can protect your mortgage, rent and other regular payments such as council tax, utilities bills, finance agreements and even gym memberships and satellite/cable tv bills. With low monthly payments you have a choice of cover between accident, sickness and unemployment, accident and sickness or unemployment only, with 12 or 18 month benefit options.

UK Unemployment hits record heights

The UK Government have just released the latest economic indicators from the Office for National Statistics (ONS), and it makes grim reading. doom and gloom awaits us all if the trends continue……

If you haven’t taken out unemployment insurance yet, there may still be a little time, although given latest figures you will have to move as fast as the postman with the redundancy notices, as UK Unemployment hit record heights.

Here’s the facts of the state of Britains Economy

These are graphs showing the working age employment rate and the unemployment rate

The employment rate for those aged from 16 to 64 for the three months to November 2010 was 70.4 per cent, down 0.3 on the quarter.

The number of people in employment aged 16 and over fell by 69,000 on the quarter to reach 29.09 million.

The last time there were larger quarterly falls in the employment level and rate was in the three months to August 2009.

The number of people working full-time fell by 37,000 on the quarter to reach 21.16 million and the number of people working part-time fell by 32,000 to reach 7.93 million.

Part Time Working at all time high!

The number of employees and self-employed people who were working part-time because they could not find a full-time job increased by 26,000 on the quarter to reach 1.16 million, the highest figure since comparable records began in 1992.

The unemployment rate for the three months to November 2010 was 7.9 per cent, up 0.2 on the quarter.

The total number of unemployed people increased by 49,000 over the quarter to reach 2.50 million.

Male unemployment increased by 43,000 on the quarter to reach 1.48 million and female unemployment increased by 6,000 on the quarter to reach 1.02 million.

Youth Unemployment at record levels!

The unemployment rate for those aged from 16 to 24 increased by 1.0 on the quarter to reach 20.3 per cent, the highest figure since comparable records began in 1992.

The number of unemployed 16 to 24 year olds increased by 32,000 on the quarter to reach 951,000, the highest figure since comparable records began in 1992.

Redundancies on steady increase.
There were 157,000 redundancies in the three months to November 2010, up 14,000 on the quarter.

The number of people claiming Jobseeker’s Allowance (the claimant count) fell by 4,100 between November and December 2010 to reach 1.46 million, although the number of people claiming for up to six months increased by 7,200 to reach 960,300.

The total number of male claimants fell by 6,600 on the month to reach 1.02 million but the number of female claimants increased by 2,500 to reach 439,300.

The inactivity rate for those aged from 16 to 64 for the three months to November 2010 was 23.4 per cent, up 0.2 on the quarter.

The number of economically inactive people aged from 16 to 64 increased by 89,000 over the quarter to reach 9.37 million.

Early Retirement at Record levels !

The number of people who were economically inactive because they had taken retirement before reaching the age of sixty-five increased by 39,000 on the quarter to reach 1.56 million, the highest figure since comparable records began in 1993.

Wages Stay the Same!
The earnings annual growth rate for total pay (including bonuses) was 2.1 per cent for the three months to November 2010, unchanged from the three months to October.

The earnings annual growth rate for regular pay (excluding bonuses) was 2.3 per cent for the three months to November 2010, unchanged from the three months to October.

The Oulook.

Very Bleak!  The current situation is comparable to the early Thatcher years and the axe has yet to fall on 600,000 public sector workers. The knock on effects to the high street of this contraction in money flow will damage small to medium sized businesses as demand inevitably drops. Further unemployment within the already contracted private sector is inevitable as orders dry up and the unemployment queues will increase.

All sectors of the economy will suffer from this so called ‘double dip recession’ particularly high end products and high street businesses will suffer. Insurance will not have an easy time either! Already we are seeing once profitable sectors like shop insurance virtually disappear as a viable large market as the number of shops rapidly decreases. When was the last time you saw a high street travel agents or hardware store? The pattern is being repeated across all sectors of the UK Commercial Insurance market.

Coupled with this we are under immense inflationary pressures from energy prices and global food markets which inevitable, although foolishly, will lead to the Bank of England be foreced to politically raise Interest rates. After all, there are no more weapons in the economic arsenal.

Darwinian ConDemNation.

The future is blue and orange and civil commotion – If you are not a merchant banker, are you fit enough to survive?

Unemployment to hit North of UK First warns Specialist Insurer

As the CON DEM coalition Government budget deficit cutbacks begin to take effect, Insurance Blog asked one of the UK’s  leading Unemployment Insurance specialists to look at where the cuts are going to be made and who is going to suffer……….

UK Government Cutbacks Will Widen the North-South Divide

News of job losses continues unabated. Not so much for those employed by the house builders or major financial institutions, but further down the economic food chain. Those companies such as fashion house Ethel Austin with 300 stores predominantly in the North of England. They called in the receiver in February 2010 and have since set about closing 120 stores and issuing 1800 redundancy notices. They, like many others shedding labour, held on waiting for an upturn in the economy that never came soon enough to save them. Faced with still hesitant consumer spending, their loses continued and creditors ran out of patience. However, for the North, it is about to get a lot worse.

The UK’s fairy tale economy saw a mushrooming of Public Sector jobs over the last 10 years. The broad industrial group ‘public administration, education and health’ covered 7.16 million jobs in 2007, 26.9 percent of total employment (Source: ABI statistics). Since then the Public Sector has grown whereas the Private Sector has been battered by the recession. In 2007 there were substantially less than one million unemployed, in February 2010 this figure had grown to 2.5 million (Source: office of National Statistics) and almost all of these job losses were in the Private Sector. Post election slashing of Government budgets is unavoidable and contraction of Public Sector jobs is now widely forecast. The only question is where the axe will fall.

The North South divide is about to get a lot wider as the cut backs in pubic expenditure will be felt most acutely in the North. Because of their national pay scales, the wages of Public Sector employees have always gone much further in the North. They offer the opportunity to spend significantly more in the local economy than their colleagues in the South, saddled for years with high mortgage costs and rents. This has benefited the money in circulation in the North and the boom in restaurants, bars and countless other businesses blossomed up and down the land. Just how much this was dependent upon salaries paid out of the public purse is about to become far more apparent.

Things have now changed and ‘its grim’ is about to return ‘up North’ because cut backs will be felt disproportionately by the major northern conurbations. Perversely, past efforts of Governments to create jobs in northern Britain are about to make matters worse. The Lyons Review from 2004 had a target to move over 24,000 jobs out of London by this year. However Lyons followed years of relocation of Government functions to the regions that started in the 1970′s. As a consequence, by 2009 in the North West 3.4% of total employment was in the Civil Service. This compares to a more typical 1.3% in Eastern England and just 2.1% in London despite being the heart of Government. (Source: ONS, Civil Service Statistics, 2009).

Politicians pledging to preserve front line services in Health and Education will only mean even more pressure is applied elsewhere. Once again it is the North, specifically core cities that are likely to bear the brunt. Local Government statistics show they employ just over 40 people per 1000 residents in cities across the UK as a whole. However, in Manchester this is nearer 45 and in Birmingham, Nottingham, Leeds and Newcastle there are over 55 per capita. Clearly these cities offer greater scope for large scale cut backs than elsewhere in the country.

Whether the Public Sector ‘efficiency savings’ manifest themselves in redundancies or just a recruitment freeze, the North’s disproportionate dependency on the public purse will weigh heavily for several years to come. Money will melt from local economies and it follows that particularly smaller or regional businesses will suffer as a consequence.

State benefits paid when out of work are pitifully inadequate to meet the outgoings of the average household. Therefore, should anyone not have savings to get them and their families through six months to a year of unemployment, they should consider Income Protection Insurance. This can be bought for much less than insuring a car. On-line there are Income Protection Insurance providers offering typical policy benefits of up to £1500 per month. This will pay to up to a year and is enough to meet mortgage and other big bills. Dennis Haggerty of income protection specialist iprotect insurance commented “The most popular benefit level chosen by our customers is £1,000 per month, the average monthly premium for this insurance is under £30.”

Income Protection Insurance is only available to people who are in work and have no immediate prospect of being selected for redundancy. So the time is running out for Civil Servants and other people in the Public Sector to secure this cover before the budget cuts for their particular area are announced.

Insurance companies are there to spread the risk of lost earnings. However they will not sell this type of cover to someone who is very likely to be made redundant, just like they decline fire insurance for a house that is already smouldering. With Public Sector jobs looking vulnerable, there has never been a more urgent time for anyone ultimately paid by the taxpayer to consider how they would meet their financial commitments if they were out of work. With a large section of the local workforce suddenly cutting back their spending because they are worried about their jobs, people employed in the Private Sector ‘up North’ should also be thinking how this could affect them and taking steps to protect themselves and their families.

Dennis Haggerty FCII M IDM Marketing Manager specialises in the supply of low cost on line Lifestyle Protection, Income Protection and Mortgage Payment Protection Insurance.

Key to the success of i:protectinsurance has been the focus upon supplying a product range that is available exclusively on-line. By eliminating the usual costs associated with selling insurance: telesales teams, direct mail, middlemen and commission, i:protect can offer customers exceptional value for money.

The i:protectinsurance product range includes Income Protection / Lifestyle Protection, Mortgage Payment Protection, Gadget Insurance and Mobile Phone Insurance called Phone PLUS

Income Protection Insurance and Mortgage Payment Protection Insurance

Unemployment Insurance – An Election Safety Net?

The past week of electioneering and the unemployment figures released midweek by the Office of National Statistics, paint a gloomy future for many currently employed in the Public Sector and jobs that rely on Government Funding.

Whatever the outcome of the General Election on May 6th, there is risk in all the policies pursued and in the unlikely event of the Conservative Party winning an overall majority, six billion pounds of spending cuts would put thousands of public sector, particularly those in the health service, jobs at risk.

We are currently in the trough of the deepest recession since the Conservatives led us into the Thatcher generated trough of the early Eighites, and the Boom Bust Major recession of the early Nineties.

Recessions are basically measured by the level of output of a nation, it’s Gross Domestic Product or GDP. Output is of course affected by demand which in turn is controlled by Government and monetary policy. When output falls we are in a recession.

The difference with the current recession is that it is not a result of a mismanaged economy or poor government strategy as with previous Conservative led recessions, moreover it is the result of a collapse of a mismanaged global banking system.

The above graph demonstrates that although we are in the deepest output recession since the 1930′s, unemployment has remained relatively low up until now. This is because the current recession is a credit led recesssion where demand has been as artificially curtailed by the banking system as it was as artificially created for the housing market. Overall the state of the economy was fairly healthy!

The graph also shows that the effects of quantitive easing are working in keeping employment stable and the difference between the current stable levels of unemployment and those suffered under Thatcher in the 1980′s is the difference in levels that we should expect if the Conservatives are returned to power in May.
And who is going to pay for all this unecessary unemployment?
There is no North Sea oil revenue to squander on dole queues like under Thatcher, and no new information revolution coming to help as happened to Major!

Furthermore, the largest national debt in history created by the policies of quantitive easing, is not a sinkhole to be used as a political football.
Where has all the money gone?
Quite simply into the coffers of Northern Rock, Lloyds TSB Bank of Scotland and RBS to keep them afloat.

I for one am sick to death of hearing about job cuts and job taxes when it’s quite clear that it should be the Banks paying back the money they’ve borrowed and not profiteering off of the futures of Government bonds used to bail THEM out!

A hung parliament, the most likely outcome, will surely exacerbate the underlying trends in unemployment and it would be very prudent if you work for the Government, Civil Service, Armed Forces or Health Sector to get some private unemployment insurance in place now before the cuts start happening. Unemployment Insurance is simple to purchase online, just enter your age and the amount of cover you want to get a quote; and it will provide you with peace of mind and protect your family, income and lifestyle for a few pounds per month, no matter which colour is flying over Whitehall in May!