Mortage and Home Equity Lending Agency is to abandon obligatory life and employability insurance of their borrowers. This kind of insurance is obligatory in most credit organizations, but this Agency is going to make it volantury. We remind that this issue draw increased attention of some establishments.

Antimonopoly organizations dislike tandems of banks and insurance companies. Rospotrebnadzor administrators reckon such banking practice infringes consumers protection laws while it doesn?t provide people any option.

Nowadays most banks bind mortgage borrowers over life, employability and subject of pledge insurance. Tariff on life and employability insurance amounts to 1% from outstanding credit sum and is paid annually. Payment amount depends on borrower?s age, state of health, professional activity. Sometimes banks demand to insure co-borrower?s life in case his income is taken into account by calculating the sum of credit.

Insured accidents include death of the insured person, partial or full disablement (groups I and II) during the insurance contract validity.

Experts reckon mortgage programs without insurance will indemnify risks by higher interest rates. So borrowers will be able to choose whether to take credit with life insurance and low interest rate or only with high interest rate. This novelty won?t make mortgage more available anyway.

"However it can cause developing of common procedure which will regulate cooperation of banks and insurers. But nowadays this tendency is not so popular, - says Alexey Shestakov, analyst at group of companies Region. Banks are going to raise credit interest rates due to higher risks. Insurers dealing with mortgage will reduce their participation in this segment".

Mortgage insurance is an integral part of home equity lending in most European countries, said to RIN.ru Olga Lopatina, deputy administrator of department dealing with risks insurance. "Despite the crunch and opportunity to declare off insurance, most borrowers will probably choose programs with it. Risk to lose flat or health will not but make people insure their life. Insurers will try to attract clients by reducing insurance tariffs".
sections: Economics