ABI: Insurers working hard to improve customer experience of annuities

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Monday, 12, May 2008 12:00

New economic research into the annuities market, published today by the ABI, shows that 85% of single life level annuity customers receive a rate that is at least 95% of the highest rate available. The research shows the market delivers good rates for most customers – including many of those who do not change provider.

Looking ahead, more is being done to encourage consumers to check whether they can get a better deal on the open market, and to improve the overall customer experience of buying an annuity. Significant steps are being taken to encourage consumers to look around the market, including through improving the information provided to consumers at retirement. And the industry is working hard to reduce the time it takes for annuity payments to begin.

Rebecca Driver, the ABI’s Director of Research and Chief Economist, said:

“Our research shows that many consumers get an annuity at a rate that is close to the highest rate available. There also appears to have been some improvement in outcomes. In 2002, FSA research found that almost 80% of joint life annuitants received a rate of between 85% and 95% of the highest rate available in the market. Ours shows that almost 80% of joint life annuities are sold at a rate above 95% of the highest rate.

“Annuities provide security and peace of mind for millions of customers. The variety of annuity products available, and continuing innovation by providers, is good for consumers. Now we are doing more to improve the service that consumers receive from the industry. Our goal is to ensure that they are better informed of the range of options they have and the key issues to consider when choosing an annuity. There also needs to be a wider debate on retirement income, in which the ABI will play a full part.”

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Notes for Editors

1. Enquiries to:

Jonathan French 020 7216 7392 (Mobile: 07958 330 480)

Malcolm Tarling 020 7216 7410 (Mobile: 07776 147 667)

Erfan Hussain 020 7216 7411 (Mobile: 07712 841 184)

Kelly Ostler-Coyle 020 7216 7415 (Mobile: 07968 364 302)

2. ABI Research Paper No.8: Pension annuities and the Open Market Option, is available on the ABI web site, www.abi.org.uk. The research is based on data provided by 26 ABI member companies and existing ABI and other data.

3. The new ABI Customer Impact Guide on Handling Customer Claims, published in February 2008, replaces the two previous ABI Statements of Best Practice on Pension Transfers and Pension Maturities. The new guidance states that payments must begin on an agreed retirement date – previously, the requirement was to make payments within 14 days of that date. If there are significant delays in making payments, interest should be paid to the customer. The guide is available on the Customer Impact web site, www.customerimpact.org.

4. The ABI is the trade association for Britain’s insurance industry. Its nearly 400 member companies provide over 94% of the insurance business in the UK. It represents insurance companies to the Government, and to the regulatory and other agencies, and is an influential voice on public policy and financial services issues. ABI member companies hold up to a sixth of all investments traded on the London Stock Exchange, on behalf of millions of pensioners and savers.

5. An ISDN line is available for broadcasts.

Copies of all ABI news releases, together with other information from the Association, can be seen on our website http://www.abi.org.uk