General Insurance Article - UK’s creditor insurance industry unlikely to bounce back

 According to the report, the PPI scandal, which revealed UK banks’ dishonest PPI sales strategy and elicited compensation claims worth billions of pounds, caused the creditor insurance market to plummet in 2009–2013 and again in 2014. Although Timetric points out the presence of supportive trends - lending to individuals and raised consumer confidence - these are assessed as not sufficient to prevent a further market contraction in the next four years.
 
 “Although a move towards short-term income protection products has helped some providers to dissociate from the toxic term PPI, the market’s tarnished reputation continues to strain almost all of creditor insurers’ books,” says Steffen Mueller, Financial Services Analyst at Timetric.
 
 “The leading creditor insurers in the UK all saw their premium income in the category falling significantly in 2014,” he continues.
 
 With the creditor insurance share in insurers’ non-life portfolio shrinking as well, the mid-term outlook for the category is on a downward trend. The Timetric report estimates gross written premium to decrease at a compound annual growth rate of -6.62%, from £496.8 million in 2013 to below the £300 million mark in 2018.
 
 “Following the scandal, most UK banks have exited the PPI market and are still recovering and cutting losses. Distribution options for payment protection products are therefore limited. To date, a more positive outlook does not seem that realistic,” Mueller concludes.