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Press Release
18 August 2008
Self-insuring Does Not Pay Off
Assurant Solutions warns that consumers tempted to self-insure rather
than pay out for what they see as an expensive insurance premium could
actually find themselves facing a serious shortfall instead of having
a nest-egg for rainy day.
With the barrage of negative headlines that have surrounded payment protection
insurance (PPI) products over recent months, many consumers may be considering
alternatives to insurance, such as putting aside the money they would
have paid in premiums into a savings account – but would this be
enough?
The average cost per £100 of cover for mortgage payment protection
insurance (MPPI) stands at around £4.75. The average new mortgage
approval this year in the UK is £135,000 with monthly repayments
of around £900, so the MPPI premiums based on this would be £42.75
per month. If a consumer put this amount aside each month it would
total £513 after a year – a little over half one month’s
mortgage.
Considering that the industry average length of an MPPI claim for unemployment
last year was 167 days and 159 days for accident or sickness according
to the CML research, consumers would need a minimum of £5,400 in
savings just to cover their mortgage payments alone.
Ian Moffatt, Managing Director of Assurant Solutions in the UK
& Ireland, commented: “We are strong advocates of consumers saving
– it is a sensible approach to personal finance – but people
need to be realistic. If they are unable to put aside sufficient
funds to see them through a period of financial hardship, then they could
end up with shortfall of several thousand pounds. I think few people
realise how quickly they can go from being in arrears to having their
home repossessed.”
According to recent research by Yorkshire Building Society more than a
third of people could survive financially for only 11 days. The
situation looks likely to be exacerbated further by the current economic
conditions - research commissioned by Callcredit found that due to the
impact of the credit crunch, one in 10 can no longer afford to save and
have started to dip into savings simply to meet their monthly outgoings.
Ian Moffatt continued: “We would urge people to seek financial advice
or visit their local Citizens Advice Bureau if they are unsure where there
are gaps in their finances. Unless people have sufficient savings
or an alternative income such as private insurance, many will struggle
to keep a roof over their heads.”
NOTES TO EDITORS
Media contact:
Lesley Russell at Spotlight Communications
Tel: 05600 040835 or 07815 778038
Email: lesley@spotlightcomms.co.uk
Assurant Solutions
Assurant Solutions businesses develop, underwrite, market and administer
specialty insurance, extended service contracts and other risk management
solutions through collaborative relationships with leading financial institutions,
retailers, automobile dealers, funeral homes, utilities and other entities.
With operations in 25 locations, including executive offices in Atlanta,
Ga., Assurant Solutions serves clients and their customers in 13 countries
throughout North America, the Caribbean, Latin America, Europe and Asia.
Visit: www.assurantsolutions.com
Assurant Solutions is part of Assurant Inc., a premier provider of specialized
insurance products and related services in North America and selected
international markets/territories. Its four key businesses - Assurant
Solutions, Assurant Specialty Property, Assurant Health and Assurant Employee
Benefits - partner with clients who are leaders in their industries and
who have built leadership positions in a number of specialty insurance
market segments worldwide. Assurant, a Fortune 500 company and a member
of the S&P 500, is traded on the New York Stock Exchange under the
symbol AIZ. Assurant has over $26 billion in assets and $8 billion in
annual revenue. Visit: www.assurantsolutions.co.uk
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