Equity between with-Profits Policyholders and Shareholders: Issues and Challenges
48 Pages Posted: 2 Dec 2012
Date Written: January 17, 2012
Abstract
This paper considers equity, or fairness, as being based on with-profits life insurers acting in accordance with their contracts. It uses the principles of with-profits business in conjunction with a legal approach to derive implied terms in with-profits contracts. The author examines certain situations of conflict between with-profits policyholders and shareholders. The paper does not regard all concerns put forward on behalf of policyholders’ interests as justified in practice: actuaries and regulators have been alert to issues and in many cases have taken appropriate action. However, it does suggest a number of practices that may be unfair. The paper also suggests that the current process for the re-attribution of an inherited estate may favor shareholder interests over policyholder interests.
Keywords: equity, inherited estate, re-attribution, treating customers fairly, with-profits
JEL Classification: D63, G22, G28, K23
Suggested Citation: Suggested Citation