Norwich Issues Red Alert
Norwich Union has given its hapless endowment policy holders an unwelcome New Year present, by categorising nearly 90% of its 750,000 mortgage endowments as being in the "Red" category.
The red alert means that policyholders need to take urgent action, to avoid shortfalls on their home loans.
Norwich Union stated that 89.5% of endowment holders had been placed in the 'red' category, this is a staggering rise of 72% from last year.
Last year Norwich Union categorised 7% of its endowment policyholders as green and 21% amber.
David Riddington, senior actuary for Norwich Union, said:
"We didn't think amber was adding a lot. What we want, and what the FSA wants, is if people aren't on green, they should really think about the position they're in and decide whether to take action.
What happened with the amber is it perhaps lulled people into not doing anything, so this is a way to get people to at least sit up and take notice."
A fair and honest point, in my view, which in effect makes a mockery of the FSA's three coloured traffic light system.
The average shortfall projected by Norwich Union for 2007 is £1,400.
As I keep repeating, all of this heartache, wasted time and money could be avoided if the life assurance industry "bit the bullet" and underwrote these useless underperforming products.