Michael Ring (Mayo, Fine Gael)
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Question 117: To ask the Minister for Finance if he has satisfied himself that homeowners are facilitated in switching their providers of mortgage protection insurance; and if he will make a statement on the matter. [7955/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Mortgage protection insurance is to provide, in the event of the death of the borrower, for the payment of a sum equal to the outstanding balance of the loan, although some policies may also offer greater life cover or an investment element.

Mortgage protection policies are usually put in place at the time of drawdown of a mortgage loan and the annual or monthly premium is calculated on the assumption that the policy will continue in force over the lifetime of the loan. Typically this would be for a period between 20 and possibly 30 years.

Switching insurer would involve cancelling the policy in force and taking out a new one. Any change in actuarial factors such as the age and health of the insured person or persons, and the amount of cover and the length for which it is required, together with any commission and other sale costs, will all affect the premium charged in respect of the new policy. Accordingly, while it may be worthwhile to review the level of cover under the policy on a regular basis, switching insurer may not be an advisable course of action.

In the circumstances, the interests of consumers would be better served by seeking to ensure that they are facilitated in getting value at the time the insurance is put in place rather than seeking to facilitate switching. The Financial Regulator has already taken a number of initiatives in this regard, including its independent consumer guide to mortgages and the independent guide to life insurance, which explains mortgage protection insurance in more detail and encourages consumers to shop around.