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Who is policing policy changes?

It was interesting to read in Product Matters about Norwich Union&#39s commitment to with-profits (Money Marketing, February 19). The strange thing is that it does not offer a with-profits contract any more.

You can call a bed a chair because you can sit on it but the other way round it becomes a very restless night.

I have just received an email from the actuarial department at Norwich Union where it confirms that its with-profits policies have not been with-profits policies since 1998.

The definition of with-profits has been quite specific in history. It is not just a managed fund, it is in effect a managed fund that also participates in the profitability of the underwriting office. That is what with-profits policyholders buy in to.

The full dedicated shareholders can expect a portion of the gains but with-profits policyholders expect their bit too.

Unless I have completely misread the missive, which has taken four months for Norwich Union to produce, in 1998 it unilaterally decided that it would change the definition and the make-up of a contract. Should there be a regulator that stops that happening?

Standard Life has proved by the dextrous way it has dealt with its recent transfer of a large slice of its equity holdings that it is every bit as capable of looking after other people&#39s money as the next man. But it does seem that all the insurance companies have developed an arrogance that allows Norwich Union to disenfranchise its with-profits policyholders from the only thing that gives them a differentiation from a managed fund and Standard Life the authority to backdate the terms and conditional of its policies to November 16 without thought for the amount of work it takes to explain these contracts and get them on the books.

While the FSA fiddles with perception, the facts are being left to look after themselves.

With-profits is about sharing in the trading success or otherwise of the office. Let us have it spelled out and use the term with-profits only if and when it is appropriately applicable.

Terence O&#39Halloran Chartered insurance practitioner, Lincoln

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