Seán Fleming (Laois, Fianna Fail)
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365. To ask the Minister for Housing, Planning, Community and Local Government his views on the mortgage protection insurance scheme which charges local authority borrowers a 0.47% premium; if, in view of this high charge local authority borrowers can obtain mortgage protection insurance on the open market at more competitive prices and satisfy his Department and local authorities they have adequate mortgage protection insurance; and if he will make a statement on the matter. [35142/16]

Simon Coveney (Cork South Central, Fine Gael)
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The local authority mortgage protection insurance (MPI) scheme is overseen by the Mortgage Protection Committee which is a sub-committee of the County and City Management Association (CCMA) and is representative of the CCMA, local authorities, the Housing Finance Agency and my Department. The local authority MPI scheme has applied to all house purchase loans approved by local authorities after 1 July 1986. One of the conditions of the scheme, which is a group policy, is that it is obligatory for all local authority borrowers who meet the eligibility criteria to join the scheme. Altering this condition would have a negative impact on the scheme and increase the cost for all existing borrowers. A local authority housing loan applicant who is not eligible for the local authority MPI scheme must source a suitable comparable individual MPI policy from the market.

There are a number of differences between the local authority MPI scheme and standard MPI products available on the market. Standard MPI products are individually priced based on a member’s age, amongst other factors, whereas the local authority MPI scheme is a group arrangement offering a single group rate per €1,000 sum assured to all participants in the scheme.

Aside from the difference between an individual and a group rate, the following factors are the main influences on the price of the local authority MPI scheme:

i. standard mortality and morbidity factors based on population statistics;

ii. the local authority borrowers’ risk profile;

iii. the terms and conditions of the local authority MPI scheme and, in particular, the fact that all eligible local authority housing loan borrowers are accepted without medical evidence; and

iv. the claims experience of the local authority MPI scheme.

The Local Authority MPI scheme also provides extra benefits, such as;

- mortgage repayments are paid if there is a valid claim as a result of disability;

- separate to life cover, an additional €3,000 is payable in the event of a member’s death; and

- members are covered for death up to age 75 whereas standard MPI cover usually ceases at the age of 65.

The Mortgage Protection Committee which oversees the scheme endeavours to achieve a balance between the most economic rate to be charged for the scheme and the benefits provided. As part of the current re-tendering process, the Committee will seek to secure with effect from 1 January 2017, the most appropriate Mortgage Protection Insurance cover at the best value for money for local authority borrowers.