Firing line: Otto Thoresen

Otto Thoresen, director general of the Association of British Insurers, is one of the great and good of the insurance industry.

He ran Aegon in the UK for six years and was tasked by the government to look at financial capability, and why people get themselves into money problems.

Many of his recommendations were accepted by the government, which led to the creation of the Money Advice Service and, to a lesser extent, the introduction to compulsory financial education in schools.

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He is still talking to the government, but also dealing with issues ranging from flood defences to EU directives.

He said: “It was my belief in the role of insurance that brought me to the job [and] the need for more and more people to make private provisions. The bulk of the issues that we deal with affect every aspect of the way people live their lives.”

Of his previous role at Aegon UK, he said: “For a chief executive operating in the current environment with the strong regulatory regime and very demanding environment on shareholder returns, [that’s] not an easy job and there are significant pressures.

“The ABI can be demanding in a different way. There’s a constant stream of issues where the industry view and voice needs to be made clear, and it’s getting up to speed with such a range of issues.”

One of Mr Thoresen’s big issues is still financial capability, a subject he did not abandon after completing the Thoresen Review of generic finance five years ago.

He thinks the authorities are still missing a trick, especially when it comes to handling debt. “When you get people into a policy discussion with the regulator, the tendency is to have these discussions on pensions and protection, without any discussion on debt, but it’s obvious that they are very strongly linked,” he said. “Your ability to save and make provision is strongly linked to discretionary income servicing debt – they don’t tend to be linked up [by the authorities].”

A large problem is that people in the UK and the West generally do not have a very sensible attitude to their finances when things go wrong.

He said: “There’s a lot said about the culture of saving in Asian markets and it’s very well known that the state doesn’t provide.” Therefore, he added, families in Asia save and buy insurance products to protect themselves.

“The view we have in Western society… is that when all else fails the state will provide. But the level of state provision is far less than what people think. We need honesty and clarity from politicians about what people can expect from the state.”

In the past, politicians have certainly listened to Mr Thoresen, who is also chairman of Pfeg, the personal finance education charity. One of his recommendations was to set up a ‘guidance’ service for people who needed to take their first steps along the path of financial enlightenment.