Ernst & Young forecasts flood of surrenders
January 25, 2008
Policyholders would start surrendering their policies in great numbers this year because of the credit crunch, Ernst & Young's insurance spokesperson Tim Rutherford said yesterday.
This was going to make this year a troubled one for life insurance companies, which were only beginning to come out of the doldrums.
"People are also going to surrender their policies to get lump sum payments to pay off their debt,'' said Rutherford.
''They are simply not going to afford their monthly payments because of high interest rates. Life insurers are certainly going to struggle this year."
The life insurance confidence index took a hard knock in the recent past, with life insurers failing to benefit from the retail-led consumer boom since mid-2004.
However, interim results for the half-year to last June were already buoyant, showing that operations were in better shape in the second half of last year. - Mzwandile Jacks
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