Managing Partners Limited (MPL), the fund management group, believes UK life offices are deliberately hindering the traded endowment market, to the detriment of policyholders, brokers and buyers. While insurers have been generally obstructive to this market for some time, the problem has become more acute this year. If insurers fail to improve the way in which they deal with applications to transfer ownership of traded endowments then MPL believes the Financial Services Authority should ensure they review their practices and enforce more efficient procedures. 

Jeremy Leach, MPL’s Managing Director commented “Insurance companies need to start employing some commercial sense. Their imposition of red tape and unnecessary obstruction is negative for the market and damaging for policyholders. Endowments have often been a bad enough investment for policyholders as it is without life offices damaging the potential resale of these policies that would at least give them the chance of obtaining a better price on the tertiary market.. It is only recently that the FSA has forced insurance companies to advise policyholders that they have an alternative to surrendering their policies and they are evidently unhappy about it.” 

MPL believes that life companies are obstructing the TEP market because of unreasonable delays and deliberate obstacles in dealing with the simplest of communications such as the issue of surrender requests and reassignment of policies.   Mr Leach added “Insurers are just using bad administration as an excuse - some of these policyholders have been customers for over two decades and they deserve a higher level of customer care.”MPL, which manages funds that invest in traded endowment policies, has encountered obstructive behaviour from several life companies that appear keen to create barriers to policies being sold in the second-hand market. Prevention tactics include delayed and inaccurate responses to letters, aggressive phone calls and refusals to discuss re-assigning beneficiaries of policies. Insurers also refuse to administer the transfer of policies unless buyers can provide certain information. For example, they can insist on proof of the age of a life assured, even though buyers such as MPL will have had no contact with the party selling the policy and the insurer had no such requirement to issue the policy in the first place. This can mean buyers have to source information on policyholders - perhaps by going to the national records at Somerset House - which is essentially unnecessary. 

In one case this year, MPL sent an insurer a new deed of assignment for a policy on 15 April. Six months and five letters later, the insurer finally reassigned the policy - but to the wrong party. The insurer then refused to discuss the policy over the phone because MPL did not have the life assured’s date of birth, although this was never needed to buy the policy and MPL did have all other information, including reference numbers to all correspondence. The insurer finally admitted there was a mis-print and confirmed the correct beneficiary was now assigned.

This entry was posted on Thursday, November 22nd, 2007 at 12:30 pm and is filed under Managing Partners News. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.