FEAR OF FINANCE

Next Wednesday the Norwich Union announces its reversionary bonus rate for 1995, the figure which is added each year to the accumulated value of endowment policies. It will provide the first clues as to whether the 20 per cent rise in share prices last year was enough to end the trend towards shrinking bonuses, which set in at the start of the Nineties.

Those shrinking bonuses set home-owners thinking the unthinkable, that the profits insurance companies generated on their endowment policies might not be enough to pay off the mortgage when it matured, let alone pay the fat surplus which home-owners had been led to expect when they switched their repayment mortgages to endowments by the million in the Eighties. Arguably, it was the sudden realisation that endowment policies might not be sure-fire investments which undermined the housing market.