TV3 The Morning Show: Health Insurance, Car Insurance, Credit Unions

We were talking about health insurance, car insurance and credit unions this month on TV3’s personal finance slot. On health insurance in particular we highlighted that you don’t have to go from ‘having cover’ to having zero cover, instead you could opt for the likes of the Hospital Saturday Fund which is a cash plan (pays out on health related spending but isn’t like regular insurance).

Car insurance was also a topic – the new EU ruling will make it illegal to rate men and women differently based on their sex alone from 21st December this year.

Credit Unions were (and are) in the news because of problems they are having. We’ll be back with TV3 next month for more!

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Sorted! Survive and thrive in a recession

I like John Maguire, and a part of me knows that this article is about a bit of spin to make interesting reading, but it also provokes a bit of a laugh too because the quotes are pure gold… (having met the guy I can’t help but suspect it was ghost written).

At the starting line of the Berlin Marathon, I chain-smoked five cigarettes while rubbing Tiger Balm into my legs.

I used to joke that only two things would survive a nuclear winter: cockroaches and me.”

The smart thing would have been to take my spare cash and move to my mortgage-free place in Dubai with its private beach.”

I would do things other people were not prepared to do, just to prove a point.”

In between those legendary quotes there is the story of taking a dive into the downturn that so many in this industry have faced, I can tell you from experience it is a painful learning experience, but learn you will whether you want to or not.

John has …

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Loan refusal statistics: what do they mean?

There are two sets of statistics floating around; on one hand you have the banks who claim that they are lending and also that the demand for credit simply isn’t there – a belief further expounded by John Trethowan. Then on the other hand you have the likes of PIBA who counter claim that 80% of applications are being refused.

So it is important to break down the vital components. First of all, the debate often centres around Small Medium Enterprise (SME) lending; even if demand for that type of credit isn’t there it doesn’t automatically translate into a reduced demand for mortgages. The point being that we can’t compare SME loans/business loan demand to that for mortgage credit.

Secondly is ‘what constitutes a refusal’, and this is where common sense diverges. Even the bank accept that if you seek €200,000 and are only offered €100,000 that it is a loan not fit for purpose, this even goes …

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Debt relief without moral hazard.

I put on my thinking caps last week and drafted a paper called ‘Designing a Debt Relief programme with minimal moral hazard to address the Irish household debt overhang‘.

We were every happy with the write up it got in the Sunday Independent via Carol Hunt.

There is far too much talk of ‘moral hazard’ in the public debate to date, instead we should be also considering ‘separating equilibrium’ (which is kind of the opposite of moral hazard – it’s the ‘pain’ that comes with moral hazard ‘gain’).

To do this you have to create a programme which works within some of the parameters of the existing laws (new legislation must still take account of what exists before it), look at the operational aspects of the scheme (how it functions in real life), design a general algorithm of the process and most importantly have an ‘incentive alignment’ which means that neither party voluntarily makes an action to the intentional detriment of …

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