Do PPI claims impact the economy
Payment Protection Insurance, which is also known as credit disability insurance and credit life insurance, is a type of insurance coverage that shields an individual in the event of lost income due to disabilities or death. This vital form of insurance is commonly offered alongside other credit-related products, such as loans. Because PPI appeals to a lot of people, it is not surprising that more than 20 million policies currently exist in the United Kingdom alone. Despite the interest surrounding this insurance plan, a lot of people have been mis-sold PPI unknowingly. This coverage was investigated in 2007 and 2008 and the results showed that this optional insurance policy was being sold to people without them knowing what the policy entailed. If you are owed funds you should fight to get PPI compensation, but many people refrain from doing so because they believe it to negatively impact the economy.
The widespread mis-selling of Payment Protection Insurance
The economy managed to benefit greatly from the millions of customers who took out PPI insurance, because UK-based loan companies and banks have made £6bn from this form of insurance. This equates to a profit of £1.4bn, which is quite staggering. This is good for the economy because with this amount of money hidden away, banks were able to invest funds into other businesses, which ultimately boosted job opportunities and reduced levels of unemployment. However, more than 70% of policies were proved to be mis-sold PPI. The surge in PPI compensation claims that followed meant that banks were forced to pay back the money to their customers.
Some banks that were hit hard by the truth that was uncovered regarding mis-sold PPI were Alliance and Leicester, GE Capital Bank Ltd, Liverpool Victoria, Capital One and the Regency Mortgage Corporation, to name a few. A&L were fined the highest amount for the insurance that they wrongly sold to customers, with £7million being taken from them in October 2008. Although this loss of funds has prevented banks from assisting strained businesses and from gaining customers to their own business, it is enabling people who have won PPI compensation to throw billions of pounds back into the UK economy, which proves that claiming these funds will be profitable in the long-run.