# What is the biggest PR catastrophe facing the life industry?



## Chris Tarrant (6 Aug 2003)

Is it:

*A) The looming Endowment Mortgage shortfall crisis?*  Eddie Hobbs is about to be proven right in spades on his apocalyptic predictions of 10 years ago.  But already spokespersons for the life industry are poo-pooing the failure of their products against the context of house price rises.  Don't make this your final answer without careful thought.

Or is it:

*B) The Flexible Whole Life Bomb Out?*  I read in the paper at the weekend of some chappie whose premium had to go up by 250%.  A spokesperson for the company admitted this was a pretty nasty position for the customer to be in, but really no different than the Endowment Mortgage shortfall.  Isn't it weird when an industry takes solace that one disaster (for its customers) is really much the same as the next?

Or is it:

*C) The Pensions Misselling Scandal?*  But we don't have a...  Oh yes we do!  There are poor customers out there with little bits of paper locked away for safe keeping.  These were the promise of their pension given back in the late 80's.  It assumed double digit returns and double digit annuity rates.  These unfortunates are going to receive about a quarter of what is on that piece of paper.  Some companies may have kept in touch and broken the news gently.  Most won't have bothered.

Or is it:

*D) The With Profits Bond bonus disappearing trick?*  Okay, so policyholders have already seen bonuses fall.  But that was against market falls of 20%, I guess they felt they got off light.  But what about when markets rise, maybe this year for example?  Bonuses will continue to fall.  How is that going to be explained?

This question is worth the €500M annual profit of the life industry and there are no more life lines.


----------



## Brendan Burgess (5 May 2004)

*Re: What is the biggest PR catastrophe facing the life indus*

Hi Chris

Good questions asked 9 months ago. No answer from anyone here and no sign yet that any of these issues have exploded.

It's a bit odd that there has been no with-profits uproar. I suggest it is because no one understands them. 

There are very few endowment mortgages compared to the UK. Eddie Hobbs saw to them 10 years ago. Anyone who took out an endowment mortgage at the time would already be aware that they taking serious risks. The other issue of course, is that the shortfalls are irrelevant in the overall context of house prices.

Brendan


----------



## Chris (1 Oct 2004)

*Ask the audience*

Reminder that there are still lifelines left in this €500M quiz.


----------



## sfag (1 Oct 2004)

*I'd say pensions*

Dont know if they are mis-sold. But after that last stock market crash and accounting scandals who can say what the stock market will do in the future. With a lot of pension money obliged to be spent on company shares it easy to see how share valuations can be inflated.


----------

