Direct Line Gets A Political 'Thumbs Up' For A Ban On Home Insurance Bundling

Direct Line has received a welcome boost to its campaign to outlaw the practice of tying home insurance sales with mortgages, after new research has revealed that over half (56%) of MPs surveyed 'strongly agree' with the need for a ban.

Now in light of cross-party support for its campaign, Britain's leading direct insurer has written to Trade and Industry Secretary, Steven Byers, urging him to reconsider introducing legislation at the earliest opportunity, to ensure that consumers have the freedom to shop around for the most appropriate and best value cover.

Although the number of mortgage providers engaged in bundling is far fewer than when Direct Line first highlighted the practice in 1990, the company believes primary legislation is the only way to guarantee an end to the practice and to prohibit it from re-emerging.

The company has shown that arranging insurance through a mortgage provider can cost customers up to 30% more due to the hidden commissions which mortgage providers take on the sale of home insurance. For mortgage providers, this means 163400m in annual commissions and for the average homebuyer, it can mean needlessly paying almost 1634,000 more for home insurance over a lifetime of buying cover.

Aimed at gauging the level of understanding and support which currently prevails among MPs over the issue of home insurance bundling, the MORI survey on Direct Line's behalf shows:

• Two-thirds (65%) of MPs believe that some mortgage providers require consumers to purchase buildings insurance from them as a condition of particular mortgage deals. 68% of Labour MPs and 51% of Conservative MPs believe that to be the case.
• 56% of MPs said they 'strongly agree' with a ban on mortgage providers making the purchase of their own buildings insurance a condition of granting a mortgage, with a further 29% tending to agree.
• Labour MPs are more likely to agree with a ban with almost all (95%) saying they agree strongly or tend to agree, compared to 64% of Conservative MPs.

Commenting on the survey findings, Malcolm Cooper, Home business manager at Direct Line says:

"We are delighted that the survey results support our campaign for bundling to be outlawed and particularly that a ban is wholeheartedly supported by members of both parties. This is as strong an indication as one is ever likely to see of the acceptance that market practices are being allowed to continue against the interests of the consumer and we will be urging each of the main political parties to pledge to deal with this issue at the next legislative opportunity."

Technical details

A total of 107 MPs took part in the survey undertaken by MORI. Interviews were face-to-face and fieldwork was conducted between 30th October and 13th December 2000. Data are weighted to reflect the profile of the House.