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Advisers hoping for fewer claims as endowment letters turn green

Advisers hope that a rise in the proportion of green endowment mortgage letters sent out to consumers will signal a fall in claims against them.

Prudential says 51 per cent of letters sent out in 2005 were green, indicating that the fund is on target to pay off the loan at the end of the term, 24 per cent amber and 25 per cent red, indicating a high risk of a shortfall. This compares with 41 per cent green, 29 per cent amber and 30 per cent red in 2004.

There was also a drop in the number of red letters sent out by Scottish Amicable to 35 per cent from 53 per cent in 2004, with green letters increasing to 24 per cent from 16 per cent.

Falcon Group chief executive Allen Rosengren says it was inevitable that letters would gradually turn green the longer that policies had to run and blames the way that surrender values are calculated.

Rosengren says: “The powers that be did not explain the concept of endowment mortgages properly, allowing claim management comp- anies to feed on changeable information.

“I still believe that the majority will not show a physical shortfall on maturity.”

Aifa deputy director general Fay Goddard says: “We are seeing a growth in green letters due to strong investment performance, which will hopefully lead to lower complaints fuelled by shortfall announcements.”

Financial Ombudsman Service spokeswoman Emma Parker says: “The issue of a shortfall only comes to relevance when working out the amount of compensation, rather than if the policy is missold, which is decided on investment risk.”


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In Focus — May 2015: private medical insurance market in Germany

Welcome to the latest edition of In Focus. In this issue, Jelf examines the private medical insurance market for employers with expatriate workforces in Germany. This includes the common challenges faced in sourcing appropriate coverage, along with a selection of available solutions. This will be of particular interest to HR/reward decision makers with employees based in Germany. It will assess the cultural norms, risks and backdrop that are relevant to organisations with expatriate staff in this location.


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