Time to play it safe?

Chaos on the capital markets has seen variable annuity products inflict serious damage to insurers' balance sheets and customer confidence. Will this inspire a wholesale move to traditional products or can issuers repackage the VAs in a form that is palatable to both the customer and their own risk appetite? Clive Davidson reports

The role of complex financial products in precipitating the recent crisis has prompted loud calls for financial services to return to basics. Although focused primarily on banking and the toxic effects of opaque securitisation and subprime mortgages, the backlash has spilled over into the life and pension sector too, where some argue innovation should be restricted in favour of more traditional products. But that is not how the market sees it. Evidence suggests that, far from being scared off by