Risk and trust: homeowners and private mortgage insurance

Abstract

English Government policy is that social protection for mortgagors should be delivered initially through the market (Mortgage Payment Protection Insurance – MPPI). However, expectations of market expansion have not been realised. The paper explores some likely reasons for this, drawing on the emerging critique of welfare markets and the identification of the importance of trust. Data on the MPPI claiming process indicate that borrowers could not be confident in the outcome of claims, the appeals process or that they would avoid mortgage arrears. The implications for this market-based welfare policy are considered briefly.