Pensionsgiant alters terms for thousands of clients: Potential coverage reduction in Denmark

Living in a world filled with uncertainty, especially with war in Europe, PFA Pensions’ adjustment of customer terms is a demonstration of foresight and caution, according to actuaries.

It can be a prudent way to navigate the catastrophic risks that may arise.

If war were to break out in Denmark, it would pose a significant threat to the economy of pension companies, explains Jørgen Svendsen.

– In the worst-case scenario, if a bomb were to fall, there would be an incredible number of casualties.

Here, customers’ life insurances would come into play, which pension companies would have to pay out to the relatives.

– So, pension companies would be in a serious bind in such extreme situations.

However, Jørgen Svendsen emphasizes that the scenario is unlikely.

– But pension companies must consider all possible worst-case scenarios. They need to have flexibility so they can ensure the company does not go bankrupt.

The trade organization for pension companies, Forsikring & Pension, explains that it is entirely normal for their members to account for the risk of war in their terms.

This is clarified by Forsikring & Pension’s deputy director, Torben Weiss Garne.

– In the insurance industry, this is commonly referred to as force majeure.

– Within that, you have civil wars and wars with very special conditions because companies may find it very difficult to calculate those risks.

In the spring of 2022, war broke out in Europe when Russia invaded its neighboring country, Ukraine.

However, the deputy director does not believe that the outbreak of war is the reason why PFA Pension is now adjusting its insurance terms for war in Denmark.

Instead, he sees it as good service for the pension company’s 1.3 million customers.

– I believe it is a desire to be as clear as possible. It’s already difficult enough to read insurance terms in general.

– To understand that there may be some special situations related to war, this is included.

Do customers have a disadvantage with the adjusted terms?

– No, that is not the starting point. The starting point is to be aware that there may be some special considerations in a wartime situation, says Torben Weiss Garne.

PFA Pension declined an interview, but in a response to DR News, the company’s chief legal officer, Dorthe Bundgaard, states that the company has had the term for war “for many years”:

– Like other pension companies, we have clarified our terms in the event of a possible war on Danish soil.

The company also states that there has been an example in the insurance terms so far on how coverage is provided in case of war.

– We are now adding another example. It is a condition that we hopefully will never need.

– PFA is a customer community, and in the event of a possible war, we must take care of the customer community’s pension savings, writes Dorthe Bundgaard.