I propose to take Questions Nos. 237 and 242 together.
It is a statutory requirement that mortgage protection insurance (MPI) is taken out in respect of all local authority housing loans.
The Local Authority Mortgage Protection Insurance scheme is a group scheme and is designed to provide an appropriate level of insurance cover to those who wish to avail of the Rebuilding Ireland Home Loan. It is overseen by the Mortgage Protection Insurance Committee, a sub-committee of the County and City Management Association (CCMA) with representatives from the CCMA, local authorities, the Housing Finance Agency, as well as my Department and has applied to all house purchase loans approved by local authorities since 1 July 1986.
One of the conditions of the group policy scheme is that it is obligatory for all 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.
The local authority MPI is designed to provide an appropriate level of insurance cover to those who wish to avail of the Rebuilding Ireland Home Loan. It offers a number of additional features over and above the 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.
The scheme also provides other benefits over standard MPI products. These include the payment of mortgage repayments if there is a valid claim as a result of disability; an additional payment of €3,000 in the event of a member’s death, separate to life cover; and members are also covered for death up to age 75 rather than 65 as is the case under standard MPI cover.
The insurance scheme is subject to periodic review and competitive tendering, in accordance with the terms of EU Directives relating to the award of public service contracts. This is to ensure that the most appropriate cover at the best value for money is secured for local authority borrowers over the entire life of their mortgages.
