Reputation
For many years with-profit funds were very popular and large numbers of such policies were sold within the United Kingdom and in the United States.
Recently with-profit funds have had a large amount of negative press due to the introduction of MVRs. This has led people to question the opacity in setting bonus rates and the over-complexity of the product in general. Simple to understand products have been encouraged recently and the nature of the conventional with-profit fund does not fit with such simple policies. Alternatives such as a more fund-type product, CPPI or smoothed managed funds are yet to show a significant popularity amongst consumers.
Secondly the Equitable Life company sold a large number of policies with guarantees in the contract. After a series of court cases the company was required to meet these guarantees, which it did not have the money to meet. This resulted in a reduction of the value of all the policies issued by the company. This reduction received considerable negative publicity and damaged the reputation of with-profit policies.
Read more about this topic: With-profits Policy
Famous quotes containing the word reputation:
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—G.C. (Georg Christoph)
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