Opinion  

Post-Thoresen ABI must change the industry message

Emma Ann Hughes

Emma Ann Hughes

This year’s Budget must have been a rude awakening for the ABI and their now departing leader: it showed the government would only listen to - and itself disclose - so much.

When Otto Thoresen, who announced his departure today (18 November) to become chairman of the National Employment Savings Trust, joined the ABI in 2011, the trade body must have rejoiced in getting a leader the government had called upon and on whose advice they had acted.

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.

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Many of his recommendations were accepted, which led to the creation of the Money Advice Service and, to a lesser extent, the introduction to compulsory financial education in schools. (Of course, some would argue the parlous state of both currently is not much of a legacy).

Ultimately, though, this year showed the government’s dialogue with the ABI had come to a halt.

The overhaul which killed off a huge chunk of annuity sales, the bread and butter for many insurers as a spate of recent results has shown, emphasises Mr Thoresen’s failure to get insurers to recognise the need to ensure their pension customers got better value.

I have some sympathy. Being the head of a trade body means you must fight for your member’s interests - and annuity providers interest was maintaining the status quo.

But as the stock market tumble following this year’s Budget cleared showed, sometimes being the head of a trade body should also require banging heads together and telling your members if they don’t do something, change would be foisted upon them.

The greater pension freedoms granted by the government this year have shaken the foundations of the ABI. It now has many angry members having to rebuild.

That anger was clear when one of their biggest, oldest insurers and hitherto staunchest ABI supporters, Legal & General quit as a member. This also reflects the evolving nature of most firms, which are these days as much about investment management as insurance.

Of his role, speaking to Financial Adviser last year, Mr Thoresen said: “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.”

Sometimes the industry also needs to be told to change the message.

Mr Thoresen will pass the baton to Huw Evans, his deputy director general, in February 2015. In a statement Mr Evans referred to the heightened need for an effective trade body at a time of great change and of the “huge value to be gained from collaborative efforts on key policy issues”.

That collaboration will need to mean the ABI supporting change within - and not just being a mouthpiece for - its membership in the future, if it is to remain relevant.