Aviva To Abandon Windfall Payments

by Stewart Douglas

Story link: Aviva To Abandon Windfall Payments

Insurance group Aviva has today suggested it is prepared to abandon initial proposals to return windfall payments to over one million customers if it cannot finalise the terms of the deal over the next few months, in a move that has arisen from frustrated talks with policyholder representatives.

The group has been heavily involved in discussions over whether and how to divide surplus profits from a Norwich Union fund amounting to £5.2 billion, with the conflicting aims of satisfying both shareholders and policyholders in equal measure.

The move would see around one million policyholders offered cash payments in order to renounce further rights to money from the fund, with the remainder returned to shareholders. However negotiations are still ongoing over the matter of just how much of the pie should be returned to customers, and external authority Clare Spottiswoode has been appointed to advocate on behalf of policyholders interests.

The division has collapsed into farce after the involvement of the FSA over whether certain expenses could be claimed from the fund and whether this would unfairly prejudice the rights of policyholders and the amount to which they were entitled. As such, Aviva have been seen to be growing increasingly impatient at the lack of progress, hence the suggestion today.

Speaking on the matter, spokesman David Ross was concerned at the ongoing nature of the situation. “We cannot allow this process to go on indefinitely. The reality is we have a business to run, and this is taking up an increasingly significant amount of resources in terms of money and senior management time.”

“We want to be able to put an offer to policyholders as soon as possible, so we can do a deal and make these payments.”