The price, quality and distribution of mortgage payment protection insurance: A hedonic pricing approach

John K. Ashton*, Robert S. Hudson

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


Mortgage payment protection insurance (hereafter MPPI) provides varying combinations of accident, sickness and unemployment insurance and is used to protect the mortgage payments of policyholders in the event of a fall in income. Despite alleviating housing market failures, this service has been heavily criticised for providing poor value for money and being associated with unhelpful sales techniques especially when sold jointly with a mortgage in the UK. Consequently, the Competition Commission (2009) ruled that after February 2011 MPPI should not be sold jointly with mortgage lending within seven days of the credit transaction. We examine whether this prohibition was justified and if the form of distribution, either jointly with the mortgage or independently influences the premium levels. This assessment uses a hedonic pricing approach with details and premiums of MPPI policies in 2010 and 2012. Despite the success in reducing MPPI premium levels, we conclude that the Competition Commission judgement has raised concerns as to mortgagee protection.

Original languageEnglish
Pages (from-to)242-255
Number of pages14
JournalBritish Accounting Review
Issue number2
Publication statusPublished - 31 Jul 2016

Bibliographical note

Publisher Copyright:
© 2016 Elsevier Ltd


  • Insurance premium setting
  • Mortgage credit insurance
  • Mortgage payment protection insurance
  • Product quality

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