QBE has stopped providing lenders’ mortgage insurance (LMI) to residential loan borrowers who work in industries that have been affected severely by the coronavirus outbreak.

The insurer has informed its bank partners of the temporary embargo, but says exceptions will be considered on a case-by-case basis.

“We expect responsible lending obligations would have put a stop to much of the lending to those impacted by the COVID-19 crisis,” a spokesman told insuranceNEWS.com.au. “The embargo provides clarity and consistency.

“We recognise the need to look at individual borrowers’ circumstances and therefore all of our lenders have the ability to seek an exception to this embargo.”

The insurer did not mention which particular group of home loan borrowers would be affected by the policy change.

QBE is the second-biggest player in the LMI market after Genworth Mortgage Insurance Australia.

Genworth says it continues to provide LMI as needed and has not altered any of its requirements because of the virus outbreak.

“Genworth has not changed our underwriting standards and guidelines at this time,” a spokesman told insuranceNEWS.com.au. “We support our lenders who must apply responsible lending standards and assess applications on their merits.

“We note the standards require lenders to consider borrowers’ current circumstances at the time of lending.”

Lenders require home loan borrowers to obtain LMI if their deposit is less than 20% of the property’s assessed value, although this may vary according to individual banks’ policies. LMI protects the bank in the event of a default by the borrower.