The Endowment Diary

I received an unsigned acknowledgement letter (dated 20 November) from the Financial Ombudsman service this morning. This has prompted me to ponder on the timescales and workload involved in processing claims.

On the assumption that The Times estimate is correct, there are between 5 million to 6 million underperforming endowment policies. Let us make the following assumptions (drawn from thin air, I admit):

 Take the lower figure, 5 million.

 10% of endowment holders bother to lodge a claim with the Ombudsman, that is a very conservative estimate; this would give rise to 500000 claims. Which no doubt, human nature being what it is, will be lodged at the last minute.

 The processing of the claim by the Ombudsman would include in my opinion (as a professional accountant), the following steps as a minimum:

- Opening the letter

- Opening a claims file

- Registering the file on a control log

- Reading the claim form and attached contents

- Entering pertinent details into a database

- Verifying key details to supporting evidence

- Contacting the life assurance company

- Contacting the financial adviser who sold the policy

- Reviewing the validity of the claim

- Making a decision as to whether the claim is justified

- Calculating the award

- Authorising the award

- Quality control/review the decision making process

- Informing the relevant parties

- Enforcing the decision etc…need I go on?

It is my very conservative estimate that in total the above steps would take 1 man day per claim, from start to finish, or 500000 man days in total.

There are 365 days in a year, of which 104 are weekends, 8 are bank holidays and 25 (or so) are holidays. That leaves approximately 228 working days a year.

So, 500000 divided by 228 gives us 2193 man years to process these claims.

I would suspect that by then we, and our loved ones, have all died; and the homes, on which the mortgages, are secured have crumbled to dust.

Of course these are just figures plucked from the air, maybe the Ombudsman is much faster at processing claims than I have suggested!