Hargreaves Lansdown believes the one-day guarantee leads to policyholders being pressurised into buying a Standard Life annuity and has significantly contributed to the company’s high internal vesting figures.
Inline with the industry norm, Standard Life guarantees quotes to external pension policyholders for 14 days. Axa, Scottish Widows and Prudential guarantee internal quotes for two weeks while Norwich Union policyholders are guaranteed their quote for 10 days.
But Standard’s process for internal customers is different. Policyholders get a wake-up pack three months before retirement and a projected maturity value six weeks out, which asks the client to call Standard Life to talk through their options. The quote is then given on the retirement date and is guaranteed for one day.
Standard Life head of pensions policy John Lawson says: “Our view is that we have started the process three months before their retirement date, we have sent them a separate letter with the estimated maturity value and we have spoken with them over the telephone to discuss their options. There is never any pressure on the customer to buy an annuity at any point, that is not the way we work and we have really given them as much time to consider their options as possible. The process we follow is treating customers fairly with bells and whistles.”
Elsewhere, the Association of British Insurers has reported a 64 per cent drop in total single premium investment and savings new business in Q4 2008 to £3.77bn from £10.54bn in Q4 2007.
The ABI attributes the decline to the current economic conditions with the UK population less willing to part with their cash to purchase new investment products.
Total single premium accumulation and protection new business in Q4 2008 also fell by 45 per cent to £11.7bn from £21.4bn in Q4 2007. In 2008 total decumulation for new business was £13.9bn, a decrease of 1 per cent from £14.1bn in the full year for 2007.
Despite the slump in new business, the ABI says business in force figures have remained fairly steady over 2008 and says people have not actively moved money out of the insurance sector.
An ABI spokesman says: “The recessionary conditions are likely to remain for some time but the insurance industry like all other sectors will be doing its best to work to get Britain out of the situation we find ourselves in.”