Equity between with-Profits Policyholders and Shareholders: Issues and Challenges

48 Pages Posted: 2 Dec 2012

See all articles by Christopher O'Brien

Christopher O'Brien

Centre for Risk, Banking and Financial Services

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

O'Brien, Christopher, Equity between with-Profits Policyholders and Shareholders: Issues and Challenges (January 17, 2012). Available at SSRN: https://ssrn.com/abstract=2183879 or http://dx.doi.org/10.2139/ssrn.2183879

Christopher O'Brien (Contact Author)

Centre for Risk, Banking and Financial Services ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom

HOME PAGE: http://www.nottingham.ac.uk/business/crbfs

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