NU policyholders’ windfall halved by FSA ruling
A large number of Norwich Union policyholders are expecting to receive windfall payouts of £2,000 each, in summer 2008.
The company’s 1.1 million with-profits policyholders are due for a share of so called “orphan assets”, that is to say assets that are surplus to amounts needed to cover current or future payouts.
Norwich Union’s “orphan assets” total around £5 billion, which means the payment should be around £4,000 per policyholder, as historically policyholders have received 90% of the suprlus.
However, payments are likely to be in the region of £2,000 because of recently issued guidance from the Financial Services Authority (FSA) on how “orphan assets” can be shared between policyholders and shareholders.
According to Which?, the consumer group, the guidance amounts to a “smash and grab raid” in which policyholders will get less.
Which? is warning that Norwich Union’s parent company, Aviva, will receive a large amount of the cash to finance business expansion, pay certain tax liabilities and even settle claims for mis-selling.
Peter Vicary-Smith, chief executive of Which?, has stated that the consumer group “We will be exploring all legal avenues open to us.”
At the same time, Clare Spottiswoode, the independent advocate appointed to oversee policyholders’ rights, has stated that: “The FSA response to my request for information on what can be done with this money is very disappointing. It unfairly favours shareholders over policyholders.”
Category: Insurance News, Norwich Union Insurance News
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