Insurers back chief who tells it like it is
OTTO Thoresen has admitted that the resignation of one of Britain’s biggest insurers from the trade body he leads was a disappointment, but he may be able to take some comfort from the fact that other firms have pledged their support.
The Buckie-born actuary became director-general of the Association of British Insurers (ABI) in 2011 and the decision by L&G to quit the organisation by the end of this year comes amid a period of intense upheaval for an industry grappling with changes to pensions rules.
But those who know the 58-year-old former Aegon UK boss believe he will have the backing of an industry in which he has worked since 1978.
Some in the sector have claimed that Thoresen’s reputation was tarnished by a £2.8 million fine handed out by the City regulator at the end of 2010, shortly before he left Aegon UK – then known as Scottish Equitable.
The Financial Services Authority (FSA) also said the firm would pay about £60m in “consumer redress” following a string of problems, including errors on guaranteed minimum pension payments and a failure to send documents to policyholders.
At the time, the FSA – which was abolished last year and replaced by the Financial Conduct Authority and Prudential Regulation Authority – said: “By letting the issues build up over such a long period, Scottish Equitable made it even more difficult to fix the problems and this led to delays in getting compensation to customers.”
However, a former colleague told Scotland on Sunday that Thoresen, the son of a Norwegian sailor and a Moray farmer’s daughter, is seen as a “credible and influential” figure within the insurance industry and it would be “unfair” to hold past problems at Aegon against him.
The source said: “He was at the helm of a provider that had some historical issues with the way that it did business. You could say that of anyone that was in his position at any provider at that time; everyone had things going on and a lot of them were being swept under the carpet.
“You have to give Otto credit for the fact that he went to the FSA and told them the firm couldn’t move on to become a transparent and trustworthy provider without tackling these issues that had been allowed to gather. He did something that was quite brave as a chief executive by putting his hands up and admitting things went wrong. The whole industry needs more people with the honesty and bravery to be able to do that.”
So far, no other providers have admitted in public that they would follow L&G’s lead in quitting the ABI – a move that echoed the resignation of savings and investments group Skandia in 2008.
Aviva, Prudential and Scottish Widows have given their backing to the trade body, which was formed in 1985, while Thoresen’s successor at Aegon, Adrian Grace, said: “We’ll continue to be members of the ABI.”
However, he admitted that the Edinburgh-based life and pensions provider could change its mind if the price of being a member of the organisation “didn’t represent the value we got back”.
He would not divulge how much the firm spends on its ABI subscription, but an industry insider said it would be “well below” the seven-figure sum that L&G is understood to have been paying.
Grace said: “We obviously review our membership periodically and will continue to do so, but certainly in our last review we saw the value of being part of that industry body. We’re surprised at the departure of L&G, but you’re not obliged to be a member and you make your own call.
“Ultimately each company has a responsibility to its own customers and regulators and that can never be taken away. The ABI is a voluntary organisation, in terms of you don’t have to participate in it, but it helps to formulate an industry view. I think that’s very helpful at times of great change when the industry gives one view.”