Aviva has become the first insurer to complete a transfer of insurance dormant assets to the government’s dormant assets scheme, marking the scheme's expansion to insurance and pensions assets. 

The parties declined to disclose the value of individual transfers but said annual figures will be published as part of organisations’ standard financial reporting commitments.

The move is a culmination of more than six years to adapt the model to new sectors and additional assets in the Dormant Assets Act 2022 to unlock more assets to support social and environmental initiatives. 

More than 40 banks and building societies are currently in this voluntary scheme operated by government-owned Reclaim Fund Ltd, but Aviva’s involvement “paves the way” for other companies in the sector to join, according to the parties. 

Kirsty Cooper, group general counsel and company secretary at Aviva, said: “I do think that assets sitting on a balance sheet not doing anything when they could actually be doing good things in society is the right thing to do.”

During a media briefing on Monday morning, she explained that the first movement of assets was in relation to endowments and other investment bond-type of products.

Since the scheme was first established for banks and building societies in 2011, more than £1.6bn in dormant assets has been transferred to RFL. From this, almost £900m has been distributed to good causes, benefitting more than 2,500 social, community and environmental initiatives across the UK.

The Association of British Insurers has supported the scheme expansion and has developed resources to help companies in their preparations for joining the scheme.

Hannah Gurga, the ABI’s director general, said the trade body hopes other insurers and pension providers will follow, adding: “This expansion unleashes our sector’s potential to use the millions of pounds it has in unclaimed assets to support good causes, with customers being able to reclaim their money indefinitely.”

Beyond insurance and pensions, the scheme will open to assets in the investments and wealth management sector, along with securities or shares in UK listed companies in the coming months. 

“Conservative estimates suggest that expansion can potentially unlock a further £880m for good causes while also strengthening industry-wide efforts to trace, verify and reunite customers with dormant assets,” said Aviva and RFL.

A dormant asset is a financial product, such as a bank account, life insurance policy or money purchase pension that the owner, executor or beneficiary has not accessed for an extended period (15 years in the case of bank accounts and seven years for insurance policies) and where the financial institution’s efforts to trace and reunite the owner with their account or other financial product has failed.

Under the scheme, dormant assets remain the property of their owners and the scheme must match what the business would have paid the owner had the cash proceeds of their assets never been transferred into the scheme. This means that owners can reclaim any money owed to them at any time.

Asked how funding was modelled given people can claim in perpetuity, Adrian Smith, chief executive of RFL, admitted that it was a difficult model but said the fund works with actuarial advisers and that it takes a “fairly sophisticated modelling approach where we ensure that we put aside money to be able to meet reclaims”.

He added: “I would describe RFL sometimes as a hybrid insurer [and] deposit taker. So on the deposit side of things, that's quite obvious. And the insurer, [it] is very much about making sure that we always have enough money to make reclaims.”

From an operational perspective, Aviva’s Cooper called the process of moving assets relatively straightforward but added that companies would need to take certain steps. 

“We need to sort of categorise the assets, get them in the correct place, and then work through the dormancy piece to make sure that they can be transferred. Obviously, prior to that, we will be undertaking the tracing and reunification. So there is a bit of operational organisation and logistics that has to go into this, but it's not insurmountable, and it's the right thing to do.”

The Dormant Assets Act 2022 expanded the scope of the scheme to include certain pension and insurance assets, namely:

·         Income drawdowns

·         Money purchase benefits payable under a personal pension scheme

·         Savings endowments

·         Term insurance

·         Whole-of-life assurance

·         Investments bonds

·         Annuities with a guaranteed payment period

·         Deferred annuities

Dormant assets funding is distributed through the National Lottery Community Fund across the four nations of the UK. In England, dormant assets funding is used to support financial inclusion, youth and social investment through four dormant assets spend organisations: Big Society Capital; Access – the Foundation for Social Investment, Fair4All Finance and Youth Futures Foundation. 

Andrew Griffith, economic secretary to the Treasury, said the move was “an important reminder” of the financial services sector's vital role in driving economic growth and supporting communities and citizens across the UK. 

“I look forward to working with Aviva and other industry participants as the scheme opens up to additional asset classes throughout the year, unlocking millions of pounds for good causes across the country,” he said.