Credit protection insurance is a convenient, effective and affordable form of financial protection for mortgages and loans say Canadian consumers.
Moreover, Canadian consumer expectations for claims payouts are being met by the industry.
In particular, Canadians with Credit Protection Insurance on their mortgages and Home Equity Lines of Credit (HELOCs) are very positive.
Some 87% say it is a convenient way to protect themselves and/or their families against major financial setbacks arising from death, disability, critical illness, or job loss.
Canadian credit protection insurance: contrast with the UK
The Canadian experience with Credit protection insurance (CPI) is in marked contrast to the UK. On 16 June, UK regulator the FCA reported that 3.9 million users have accessed its PPI website.
Since 2011, more than £35bn has been refunded to UK consumers mis-sold credit protection insurance.
But in Canada, 87% of consumers say that they are somewhat or highly satisfied with the CPI purchase experience overall.
And 90% of Canadian consumers say that they are confident in their knowledge about CPI products at time of purchase.
Furthermore, CPI holders say their expectations of the claims process are being met by the industry. 80% of consumers report satisfaction with their claims experience (94% for those whose claim was paid).
Those are the key findings of new public opinion research by Pollara Strategic Insights. The survey asked Canadians about their experience with CPI on their mortgage and/or HELOC.
This type of insurance is also known as creditor’s insurance. It is used to pay off or pay down a mortgage or HELOC. And it is used to make debt payments in the event of death, disability, critical illness, or job loss.
CPI coverage is typically secured through the financial institution providing the consumer’s mortgage or HELOC financing. And it is provided under a group policy, enabling more Canadians to be insured at economical standard group rates.
Credit Protection Insurance: Pollara further findings
83% of Canadians with CPI say it is an effective way to protect themselves and their families from unexpected events.
Furthermore, 71% say that without CPI, they do not know how they and/or their family would be able to cope. For example, not being able to work and earn a regular income. And 70% say CPI is an affordable insurance option.
Canadians with CPI coverage also express confidence in the CPI claims process. For example, 89% of survivors/next-of-kin who made a CPI life insurance claim reported that it was paid.
Credit Protection Insurance: most important factors
- 93% say benefits and features of the coverage;
- 93% say price;
- 92% say benefit payment amount of coverage;
- 89% say ease of overall purchase process; and,
- 88% say being able to speak to someone to answer my questions.
The survey also identifies some areas which creditor protection insurance providers can improve.
For example, 25% of CPI claimants say they had made a complaint about the claims process.
The top two complaints are the following:
- 35% complain about the length of time it took to process the claim; and,
- 32% complain about the lack of updates during the process.
However, 85% of claimants who made a complaint say they were satisfied with how their complaint was handled.
The survey was commissioned by the Canadian Association of Financial Institutions in Insurance (CAFII).
CAFII co-executive director Keith Martin says: “We’re pleased that Canadians feel Credit Protection Insurance is convenient, effective and affordable. However, the survey also shows that there is room for improvement.
As an industry, we will continue to look for ways to improve customer satisfaction. And enhance the value to consumers of the Credit Protection Insurance products that our members provide.”