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Archive Stories
Archived stories from Dec 2019

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Industry tries to think of plausible replacement for PPI

UK insurance companies are looking for a new product to replace lost income following the FSA?s clampdown on Perfectly Pointless Insurance (PPI). ?In many ways PPI was a dream product for us,? said Simon Ffopir-Merchant, marketing director of Ruthless Insurance Products (R.I.P.). ?It came with a readymade distribution network through fronting financial institutions and, best of all, due to the small print in the policies, loss ratios are zero.?

Simon Ffopir-Merchant,
PPI enforcer

PPI cover was sold to every UK resident mainly through call centres, irrespective of their financial status. Agents were told to advise buyers that if they did not buy the cover they would have to give up citizenship and leave the country, forfeiting all of their possessions to burly psychopathic bailiffs who would beat them up anyway for good measure.

?In that sense we were providing a very traditional ?protection? style insurance,? said Ffopir-Merchant. ?Considering the harm that could have come to our clients if they had not paid their premiums, the rates were very, very, erm, competitive.?

However, an enquiry by the FSA put a question mark over the true value of PPI cover, especially for people without mortgages, loans or other finance packages. Ffopir-Merchant thinks the regulators got it wrong. ?We simply wanted to make sure that everyone in the country should have the same level of security and know that they are protected against any unpleasantness that might be visited on them by our partner companies,? said Ffopir-Merchant. ?In that sense it was a virtuous circle.?

Now former PPI company executives are looking to new products to replace the revenue stream cut off by FSA regulation. Ffopir-Merchant says R.I.P. is considering changing its business model to investment linked products. One idea in development is for a product where customers earn a tax free savings rate of 0% on monthly payments of ?100 or more. If their payments fall below ?100, the savings pot reverts to R.I.P.?s Turks & Caicos special purpose entity where it will be shared among R.I.P. investors.

?We?re always hearing about how people need to be encouraged to save,? said Ffopir-Merchant. ?I think we?ve jolly well come up with a totally transparent win-win or lose-lose solution.?


Other news from Dec 2019
 
Travelating the Wave of Insurability
the serious stuff
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