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Analysis of payment protection insurance on the Czech consumer credit market


  • Mária Oborilová
  • Libor Coufal


The article is focused on insurance products related to the indebtedness of Czech households in the area of consumer loans. The aim of this paper is, with the help of defined assumptions, to analyse the product payment protection insurance, its benefit to the final client and identify its appropriate use in the event of an economically rationally behaving entity. The authors analyse insurance conditions and define the pros and cons of insurance for supply-side and demand-side, and also focuses on information asymmetry. For completeness, the text is supplemented also in terms of cost of insurance, through the APR and development of acquisition costs for insurance contracts. Results of the analysis indicate not suitably configured product for clients, as evidenced by the low long-term value of loss ratio indicator, and information superiority on the supply side.

Suggested Citation

  • Mária Oborilová & Libor Coufal, 2016. "Analysis of payment protection insurance on the Czech consumer credit market," Český finanční a účetní časopis, University of Economics, Prague, vol. 2016(1), pages 25-47.
  • Handle: RePEc:prg:jnlcfu:v:2016:y:2016:i:1:id:466:p:25-47

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    More about this item


    Consumer loan; Payment protection insurance; Information asymmetry; Personal bankruptcy; Annual percentage rate (APR); Loss ratio; Spotřebitelský úvěr; Pojištění schopnosti splácet; Asymetrie informací; Osobní bankrot; Roční procentní sazba nákladů (RPSN); Loss ratio;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors


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