CUNA Mutual Insurance Society has launched a new product aimed at taking advantage of a large but increasingly risky loan market.

The product, the Payment Protector Rider (PPR), provides members of the Credit Union movement with support for repayment of their loans in the event that they become temporarily disabled by accident or illness.

The PPR guarantees members’ monthly loan payment to the credit union for up to two years during which they may be temporarily disabled. David Wan, CUNA Mutual country manager, told Sunday Finance that the maximum amount of loan payment that can be insured is $50,000. The product is made available to members at a cost of $2.75 per $100 of loan repayment and the level of cover is equal to the amount of the client’s monthly payment on the loan.

CUNA’s sales and marketing manager Phillipa Beckford said there are two main benefits to the PPR. There is the continued stream of payment which the credit unions will receive, thereby minimising delinquency ratios, loan losses, and costs associated with delinquent accounts. Additionally, the members who may otherwise have defaulted on payments will receive important protection for their credit rating.

“For us at CUNA Mutual, which regards our relationship with the credit union sector as one of partnership, rather than simply that of a vendor, we are particularly pleased that the exclusivity of this product will also be providing credit unions with a competitive advantage in loan market,” Beckford said.

Beckford also disclosed that although the initial product offer is confined to loan repayments, an expanded suite of payment obligations for the PPR were already under development. She said these would eventually also cover payment regarding savings to shares and ordinary deposits; insurance premiums specific to the Family Indemnity Plan, Life, and “other” policies offered through credit unions. There are plans to also include utilities – specifically electricity, telephone and water among the payments protected by the PPR.

“This is a product with an impressive growth path, and offers members the ability to upgrade their coverage as new features are added. We are very pleased to be able to roll this out to a movement which is one of the most powerful in Jamaica – one which boasts over 950,000 members,” Beckford said.

At the launch of the product, held at the Terra Nova All-Suite Hotel in Kingston on Wednesday, Wan said the PPR was a response to the market conditions.

“Given the uncertain economic times in which financial services organisations currently operate, the Payment Protector Rider provides an important response to anxieties which might be felt by either credit unions or their members. It goes further by reminding members that their interests are uniquely represented by the almost 1 million member strong movement of which they are a part,” he said.

Orville Johnson, Executive Director of the Insurance Association of Jamaica lauded CUNA Mutual at the launch for its ability to “create or invent” its own future.

“The life insurance industry is not new to economic challenges but has always sought to deal with each crisis by finding the opportunity and seeking to create and invent our own future,” Johnson, who was guest speaker at the launch said. “The ability to survive in the current competitive local and global environment is dependent on a campany’s ability to respond to changes in their marketplace and to be relevant.”

Johnson also encouraged the credit unions to be responsive to changes within the environment.

“It won’t be business as usual so we must adapt to the new environment”, Johnson said. “Only the fittest, the strongest and the smartest and most innovative will survive. You have to observe change, interpret change and adapt to the new realities or you will end up like the dinosaurs. You have to be proactive not reactive or you will get blown around in the whirlwind of change.”