As the industry steps up its defence against a looming legacy problem by urging the Government to change legislation, Zurich Financial Services is nearing the end of its rationalisation process and is close to putting the last of its legacy products to bed.
The insurance-based financial services provider was one of the first to recognise that there was going to be an industry-wide legacy issue and began addressing its own dilemma back in 1998.
According to Zurich senior product manager for superannuation and retirement income Kate Deering, the changing landscape of financial services during the mid-90s sparked a need in the company to wind-up its old products.
“We were coming into more disclosure and we knew that if we had a lot of different products all needing different requirements every time something changed with legislation, it was going to be much easier to make those changes to fewer products,” she said.
Therefore, through the approval of a trustee, Zurich moved all of its regular premium clients out of its older products and into the modern offering at the time, a process that was complicated and took a couple of years to complete.
“We did that on the basis that the trustee needed to be satisfied that not one member would be disadvantaged as a result of that move,” Deering said.
“For those clients that would have otherwise been disadvantaged, we put an immediate bonus into their plan.”
Zurich anticipates that the entire process should be completed by August 2007, with the company finishing the rationalisation process for its older superannuation products as early as next month.
“We are always going to have legacy products, just because the product will become old,” Deering said.
“But the way Zurich is approaching it is that we recognise the value of the block of business we’ve got, and we have reduced it down for superannuation to two products and we will be able to keep those competitive with the marketplace.
“And if, for whatever reason, we need to upgrade them in 10 years, then that will be something we’ll look at.
“If you’ve got two products — it’s a lot easier to look after than 40.”
