The overriding mission of the Association of British Insurers is to speak on behalf of the country’s insurance companies. It is a mammoth task, a difficult job – indeed a nigh impossible role given the diverse nature of its 300-strong member companies and the massive egos of some of those insurance executives who sit on its board.
Over the years the ABI has religiously, and zealously, protected members’ interests, often to the detriment of consumers, and it has been more inward than outward looking. Indeed to be appointed its director general (numero uno) has been akin to being given a poisoned chalice and sometimes it has all got too much for the incumbent lieutenant.
I shall never forget Kerrie Kelly three years ago suddenly packing her bags and running back to the hills of Australia after just six months in the ABI hot seat. Indeed I was at an insurance conference on the very day she quit and where she was due to deliver the after-dinner speech. An ABI stand-in, Nick Starling, was forced to read out the speech he had dutifully written for her. Although personal reasons were given for her abrupt departure, there were whispers that the ABI’s board were not particularly impressed with her lack of focus and felt she was not delivering.
Yet times are a changing. Under the new leadership of the ‘Viking warrior’ Otto Thoresen, the ABI has begun to remodel itself. Slowly but surely, it is really attempting to live up to some of its consumer-focused aims: the promotion of best practice, transparency and high standards within the industry.
Nowhere has Mr Thoresen worked more tirelessly than in the at retirement space where for far too long too many pension suppliers (insurance companies) have failed to deliver best practice, failed to maintain high standards and failed to be transparent with customers.
This has resulted in a majority of customers being pushed by insurers into retirement income options not fit for purpose and which ignore key personal circumstances and health issues. The open market option has remained a secret to most pensioners while the value of advice has been brushed aside. Insurance companies’ financial interests have come first, customers’ best retirement income options a dim and distant second.
Mr Thoresen, thankfully, has set about changing all this. In March this year the ABI launched its retirement choices code, an initiative aimed at ensuring most people were given sufficient information by their pension providers to make informed retirement income choices.
It means customers are no longer unceremoniously bullied into buying a poor value (and often inappropriate) annuity from the manager of their retirement fund. Instead they are now encouraged, well ahead of retirement, to shop around and consider other key issues such as buying an annuity that provides not only for themselves but for dependents as well.
Although it is still too early to judge whether this retirement code is leading to better retirement outcomes, the world is a better place for it.
The retirement choices code has now been improved with the launch of the ‘annuity window’. Pensioners can go online at www.abi.org.uk/annuities and see for themselves the value of shopping around for an annuity and the wide disparity in annuity rates offered by individual providers. Example annuity rates from insurers are given and the window also allows pensioners to see what happens to their income when dependents, health issues and location (postcode) are factored in.