FROM PUBLIC TO PRIVATE - THE CASE OF MORTGAGE PAYMENT INSURANCE IN GREAT-BRITAIN

This paper examines the possible impact of further moves from public t o private provision of mortgage payment insurance in Great Britain. Th e administrative costs of the two systems are compared, and distributi onal differences between tax and premium funding are evaluated, using national survey data. The constraints under which insurers must operat e mean that private mortgage payment insurance is found to be limited in coverage, expensive for mortgagors facing average risks, and to hav e a regressive distributional impact when compared to tax-financed alt ernatives. Greater reliance on private insurance coupled with the with drawal of state benefits could lead to higher costs for mortgagors who buy cover, and potentially disastrous costs for those who do not-some of which will eventually be borne by the state. Alternatives in the f orm of a compulsory national scheme (whether part of the public financ es or at 'arms-length') or a mortgage benefit scheme are discussed.