The European insurance regulator Eiopa wants to take action against excesses in securing loans. 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 would have to take appropriate measures. Otherwise there is a risk of supervisory measures, Eiopa warned.
The so-called residual debt insurance steps in if the borrower becomes unemployed, unable to work or dies. A significant part of the gross premiums paid by consumers ends up with banks and insurance companies, while claims payments to consumers are small, the authority explained. The products appeared to be a highly profitable business for insurers and the distributing banks.