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.