Articles and Reports
Roadshow Crosses Irish Sea to Meet Policyholders in Belfast and Dublin
- Very clear feedback from policyholders is they want a deal with Norwich Union– Clare Spottiswoode revealed during the Belfast leg of the nationwide roadshow.
- “It puts a big onus on Norwich Union and ourselves to make sure that we do come to a deal that works for everyone. Be assured, I’m in the negotiations working for your interests,” she told the audience at Belfast’s Europa Hotel.
- “We don’t get the numbers for last year until the beginning of March, then the next phase will be understanding them and making sure we really understand those very well. Then we go into serious negotiations.
- “Once we’ve agreed the pot of money, we then have to work out how it should be fairly split between different groups of policyholders and that’s not an easy task either.
- “For example we have to consider: should the size of the payout be solely dependent on the size of the policy you have or should it be weighted; should we give more to those who have had their policy for longer or should we favour a particular group of policyholders more than others?
- “These are not easy questions and at the end of the day there is just one pot of money so if we give a slightly preferential treatment to one group over another that will be money coming from other policyholders. We have to reach a conclusion that treats you fairly across all groups.”
- The Belfast event was preceded by a meeting in Dublin. Clare stressed the importance of the new role of Policyholder Advocate to Irish policyholders.
- “I’m here to negotiate on your behalf to ensure you get a proper hearing and get a proper share of whatever monies are available.
What Belfast and Dublin asked Clare:
- Q. I got notification for a CGU bond but not for my Norwich Union one. They all seem to be with-profits, so just how is the distinction made for dividing this money out?
- A. It depends which fund your policy was in. Certainly you’re only eligible if you’re in the CGNU or the CULAC funds – but they can come under lots of different names. If you were in a Norwich Union fund you probably received money at demutualization. You can check if your policy is eligible by going to our website – www.policyholderadvocate.org. - which will take you to a link where you can put your policy number.
- Q. Why has this inherited estate been allowed to build up over the years? Why is it not distributed year on year?
- A. The Financial Services Authority has put in rules that ensure inherited estates will not build up from now so you can be sure that on average you will not be contributing to this inherited estate. No one here has contributed to it so any payouts are truly windfalls. We have had a lot of people saying why wasn’t it dealt with earlier – it wasn’t but are doing it now.
- Q. Why was smoothing not used for endowments and shortfalls?
- A. It is what it says, it’s smoothing. It doesn’t deal with the total change in the market; it will smooth out a bit but it doesn’t smooth out completely. You get some protection against market movements but absolutely nowhere near total protection.
- Q. If certain policyholders decide not to take up the deal, how is Norwich Union going to guarantee that future bonuses will be the same as what they would have been given there are going to be fewer policyholders paying into the fund?
- A. All that happens is the inherited estate is divided percentage-wise into those who voted ‘yes’ and those who didn’t. However you vote your policy, the guarantees on your policies, your terminal and annual bonuses will be as they ever were. The only issue is over whether you will still be eligible for whatever windfalls there might be over the lifetime of your policy. I cannot emphasise this enough – your policies will be maintained in the way they are today – we are only talking about what to do with that windfall.
- Q. Does a reattribution require a majority vote?
- A. No – this is a situation where each individual for each policy makes an individual decision whether to accept the deal. There may or may not be a minimum number of people who need to vote to make the exercise worthwhile because it is expensive – in the AXA case they insisted that 35 per cent voted yes before they went ahead. Whether we have a similar process this time we are not sure yet.
- Q. Can you press hard to get meaningful information from Norwich Union about the likelihood of future distributions to help make a yes/no decision?
- A. We have to. This is going to be one of the areas where we will have the most interesting conversations with Norwich Union because to date these with-profits policies have been a bit of a black box. It has been up to the discretion of directors to decided when and how much to pay out in distributions. These decisions should be much more open and clear.
- Q. I understand that the policy ca be redeemed without any market value reduction on the 10th anniversary of the policy, will that still apply?
- A. Definitely. Wherever there are guarantees that will be part of the deal. Whatever your vote, you will still have that MVR-free date.
- Q. Can policyholders force Norwich Union to distribute?
- A. Not under current legislation, no.
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