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A Review of Policyholders' Reasonable Expectations

Published online by Cambridge University Press:  10 June 2011

M. Shelley ,
M. Arnold  and
P. D. Needleman
M. Shelley
Affiliation:
Watson Wyatt Partners, Watson House, London Road, Reigate, Surrey RH2 9PQ, U.K., Tel: +44(0)1737-274-345, Fax: +44(0)1737-241-496, Email: mike.shelley@eu.watsonwyatt.com
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Abstract

In the light of recent judgments by the courts, there are areas where the interpretation of Policyholders' Reasonable Expectations (PRE) by actuaries may need to be reassessed. Furthermore, the discussion paper on the exercise of discretion expected from the Financial Services Authority (FSA), as part of its review of with-profits business, is likely to raise wider issues.

The time is therefore right for actuaries to have the opportunity to debate how PRE should be interpreted in the future. This paper is presented as a catalyst to enable that debate to happen, and the authors have set out their own views on some of the key issues.

The paper discusses certain areas where the interpretation of PRE adopted by Appointed Actuaries in the past may no longer be consistent with recent court judgments. Following that discussion, the actuarial profession should attempt to establish a revised interpretation of PRE, in order to provide greater assistance to Appointed Actuaries currently advising on with-profits business.

Keywords

Policyholders' Reasonable ExpectationsDiscretionSmoothingEquitable LifeAXANeedlerTaber
Type
Sessional meetings: papers and abstracts of discussions
Information
British Actuarial Journal , Volume 8 , Issue 4 , 01 October 2002 , pp. 705 - 728
Copyright
Copyright © Institute and Faculty of Actuaries 2002

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