UK - Towers Perrin has been appointed as actuarial advisers to the office of Sir John Chadwick, who was established as an independent government adviser on the development of an ex-gratia payment scheme for Equitable Life policyholders.

Chadwick has issued a document outlining his office's "provisional views" on the issues he needs to address to identify the extent of losses suffered by each class of policyholder, and to provide advice on how the losses should be apportioned between the bodies found guilty of maladministration by the Parliamentary Ombudsman in her report. (See earlier IPE article: Gov't offers Eq Life apology but limits compensation)

In the report entitled "Equitable Life ex-gratia payment scheme, My proposals as to the approach to be adopted and the issues to be addressed", Chadwick is seeking feedback on his views, which include the suggestion of limiting the losses considered for certain acts of maladministration to situations where policyholders made decisions based on misleading information.

Chadwick confirmed Towers Perrin had been awarded the role of actuarial advisers as part of the investigation, "to ensure he [Chadwick] has the expert technical support which he needs".

The report from the Office of Sir John Chadwick also highlighted the necessity of identifying who were policyholders at specific dates; those who had no "practical choice" but to remain with Equitable Life and those who had a choice but remained with the insurer.

Similarly, as the individual policyholders might have suffered "relative loss" on the basis of more than one act of maladministration, in an effort to avoid "double counting", one suggestion is for policyholders to have their relative loss measures "on the basis that is most advantageous to them".

Other issues to be covered by the investigation include:

Identifying each distinct incident of maladministration - including date at which it occurred Considering what might have been expected to happen had the incident not occurred Identifying the classes of policyholders affected by each incident and the manner they were affected Measuring the extent of relative loss each class of policyholder suffered by each incident

Chadwick confirmed the terms of reference for the investigation supplied by the government "do not require me to engage in any form of means-testing in relation to individual policyholders. I do not intend to do so".

The document also stressed that in an effort to speed up the investigation and payment process Chadwick "would seek to avoid a requirement that individual policyholders prove the basis on which they made decisions to invest or stay in Equitable Life", as too much time had passed for it to be determined fairly. 

Feedback on Chadwick's approach should be submitted in writing by 17 July 2009, and an interim report is scheduled for publication in the summer, containing the "definitive statement of his approach for determining relative losses and a definitive list of the specific issues he will address".

His progress with the government's alternative scheme to the compensation recommended by the Ombudsman follows confirmation last month that Equitable Life policyholders have been given permission to proceed with a full judicial review of the government's response to the Ombudsman's report. (See earlier IPE article: Eq Life judicial review passes to next stage)

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email