Delta Lloyd Group (DLG), the Netherlands unit of UK insurer Aviva,
has reached an agreement with Dutch consumer organisations
Verliespolis and Woekerpolis on compensation for some 200,000
aggrieved unit linked policyholders which they represent.
The action by the consumer organisations was sparked by a finding
by Netherlands regulator the Autoriteit Financiële Markten in 2006
that information provided to consumers about certain Dutch
insurance products, DLG’s included, was inadequate and that a
substantial portion of premiums were being absorbed by commissions
and other costs.
In March 2008 the Netherlands Financial Services Ombudsman made a
recommendation on compensation for aggrieved policyholders that
costs be limited to a maximum of 3.5 percent for a unit-linked
policy without guarantees and a maximum of 4.5 percent for a policy
with a guarantee of at least 3 percent on the net fund
DLG stressed that its compensation goes further than the
Ombudsman’s recommendation and encompasses not only the
policyholders represented by the two consumer organisations.
DLG has some 445,000 unit-linked policies representing a market
share of about 5 percent in the Netherlands. Of these policies
about two-thirds will be eligible for compensation, said DLG.
As an example of the compensation due to eligible policyholders,
DLG explained that on a unit-linked policy with an annual premium
at the start of the insurance of €1,200 ($900) or more without a
guarantee or with a guarantee on the net fund return of less than 3
percent, costs are maximised at 2.45 percent over the entire
“This agreement, though certainly costly for us, is in our opinion
extremely important for continuity and social responsibility
reasons, and thus marks a significant step in improving society’s
trust in the insurance industry,” said DLG’s chairman Niek
The adverse impact of the agreement on DLG’s embedded value is
expected to be about €300 million before tax.
In addition to the compensation for costs, DLG has already
earmarked €110 million in its balance sheet for unit-linked
policies with a guaranteed minimum net fund return.