The European insurance regulator Eiopa wants to intervene against excesses in loan guarantees. The agency on Tuesday called for better value for money in insurance products sold by banks with home loans, consumer loans and credit cards. Banks and insurers should take appropriate measures. Otherwise there is a risk of supervisory measures, warns Eiopa.
The so-called residual debt insurance comes into play if the borrower becomes unemployed, unable to work or dies. A significant portion of the gross premiums paid by consumers end up with banks and insurance companies, while claims payments to consumers are small, the authority explained. Products appeared to be a highly profitable business for insurers and distribution banks.