The payment protection insurance (PPI) market and its mis-selling scandal has become one of those stories notorious within financial services – one that will continually be flagged as an example of not treating the customer fairly. Banks had to put billions aside for claimants as a result of mis-selling, and ultimately paid thousands of claims.
Thankfully there are signs that this is nearly over, as the amount paid out in the second half of 2016 was the lowest since 2011; as a result, the amount banks are putting aside has fallen. This is good news for banks, especially Lloyds and Barclays, which both felt a significant impact on their financial results due to claim levels. What once was a large generator of premiums for banks and insurers has shrunk to a more accurate market size, fitting the true demand for short-term payment protection cover.
Our 2015 UK Insurance Consumer Survey reveals that there is real demand for short-term protection insurance, but it needs to be sold through the correct processes to ensure the customer is clear on what they are buying. Banks and insurers should now be able to move forward and rebuild the reputation of this product.