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Tim Breedon speech at the ABI Chairmans Dinner

Chairman’s Dinner, 2 July 2012

Good evening everyone and thank you.

Tonight marks the end of my two-year term as Chairman of the ABI.

So before I leave you to enjoy the rest of this evening, I would like to take the opportunity to offer a few reflections on where the ABI is today.

Thank you, Secretary of State, for your generous comments this evening. Over the last couple of years I have had the opportunity to work with you and your department on several areas of importance to the future of the economy and of the financial services sector. I am very aware of the importance that you rightly place of having a strong insurance sector, which is a world leader, that takes its responsibilities seriously as a long-term investor, and which sets high standards in governance and corporate ethics. These are issues that go to the heart of the ABI’s work on behalf of the industry.

As you all know, I took over as chairman at an interesting time. We were without a Director General, in difficult circumstances, and the relevance and effectiveness of the Association were to some extent being questioned. Some were even asking whether there were tasks that we have historically performed, particularly in the Investment Affairs area, that would be better carried out by others, or in combination with others.

These are fair questions – every member is entitled to ask at any time whether the ABI has earned its keep and has made the most of the considerable support given to it by the industry. Every member needs to feel that the ABI delivers more value, considerably more value, than the subscriptions it charges and levies it makes.

Similarly, firms need to be confident that the most effective way to influence policy is not working alone, but by joining with others and working through the ABI. We need to earn that confidence, because as an organization we can only work effectively if we have it and are seen to have it. It is what gives us the licence and the authority to speak, negotiate, and to fight for the interests of the industry as a whole and its current and future customers.

I believed we needed to respond to these challenges with a modernized ABI which required stronger leadership, a higher quality executive team, better structured, working more co-operatively together, with a focus on outcomes not activity; we needed to align resources with clear business plan priorities, and to alter the way the association works to create a more professional, bolder, more influential and faster-paced ABI. I believe we have made a lot of progress here. And we should acknowledge the very strong contribution that our (let us remember) still relatively new Director General, Otto Thoresen, has made in terms of improving the organizational effectiveness and delivery capacity of the ABI at a time of significant change - and high-stakes change – for the industry. I am also personally grateful for the support shown by Maggie Craig as Acting DG pending Otto’s arrival.

What is more, from being mostly reactive, we have got ahead of the change agenda and are beginning to address issues before we are forced by others into doing so, something which usually happens at a cost to the reputation of the industry. And the reputation of the industry is something of which we all need to be mindful and protective. The actions of some affect us all. Insurers are not banks – thankfully - and the ABI has been making this point over and over again over the last few years and I believe it has been understood. But that does not mean that we are where we need to be. It is only by being pro-active, by challenging established practices, and by setting higher standards for ourselves that we will improve our reputation with customers, and consequently become sufficiently trusted by government and regulators to benefit from the opportunities that should come our way as the economy and the financial sector are rebalanced following the credit crisis.

We are unusual as a trade association for having such strong representation on our board of the chief executives of the leading firms in our sector. And I hope I can take it as a sign of approval for the way in which the ABI is now operating that the vast majority of our board members are attending tonight. As individual ABI members we understand and care passionately about the economic and social value that we create through our businesses when they are well run and allowed to run well. We should remember as well that the diversity of our membership covering GI, Life, Pensions and increasingly investments considerably improves our credibility and influencing power. The ABI’s mission is to harness this collective strength to deliver the right outcomes for our customers, for the economy, for the society we serve, and of course for our sector. Indeed, the last should follow automatically from the first. And we are fortunate in having a strong, committed and active board to support us in that endeavour.

For me, particularly in the current economic climate, reconnecting with the fundamental social purpose of insurance has never been more important. It puts us on the same side as our customers, and it puts us on the same side as those who wish to see the financial services sector better support wider economic and social policy objectives It is what is increasingly driving our engagement, and I hope, ,wider partnership with Government.

Over the last 24 months we have focused the ABI on key policy issues during a period of unprecedented regulatory, economic, legislative and political change. This is a time when the industry has a responsibility to engage fully and forcefully in the policy debate: what we get right, or wrong, at this stage will have substantial and lasting consequences for the industry and its current and future customers, for growth, for fairness in society, and for the reshaping of investment markets.

In our lobbying activities, the customer and social policy interest comes first:

In respect of flooding we are discussing with government a risk-sharing model which will allow continuation and affordability of insurance cover for high risk properties when the Statement of Principles expires next year.

In motor, we have proposed radical solutions to a number of the inefficiencies and defects of the current system which lead to higher than necessary premiums for our customers, and persuaded the government of the need to address referral fees, whiplash claims and the compensation culture in general.
We have fought for the maintenance of tax relief on pension contributions, and worked on improving the buying power of pension saving for example by supporting measures to increase the ability to shop-around for annuities where this might deliver a better outcome for customers.

We have supported RDR and auto-enrolment which, done right, we see as positive developments in the longer term.

We opposed the imposition of gender neutral pricing, but when we lost the battle we ensured we worked to minimize retrospective effects and tried to make sure that Europe and not the industry would be seen to be responsible for this negative development for buyers of insurance.

And we are working closely with Treasury to play our part in ways to support infrastructure development and long-term investment to help the economy back to growth.

But we need to ensure that our investment efforts are not hampered by changes to regulations, such as through Solvency II. A decade in the making, we have been increasingly influential in reshaping this radical and ill-conceived directive particularly in the last twelve months. There remain many issues of concern to the industry, but we have made good progress particularly in securing broad support across Europe for a matching adjustment. This will help ensure that millions of UK savers will have higher guaranteed levels annuity income in retirement than would have been the case under previous proposals. A workable matching adjustment is ours to lose as we stand, and not difficult for the Treasury to deliver. Like us, they will be judged on the results they achieve by those who will suffer if they should fail, in this case future pensioners and taxpayers.

So the ABI is on the move. We were a producer-led, financial services lobbying body. That put us in the opposite corner from those bodies whose names included the word “consumer”. Today we are becoming an organisation with a broader view: one that recognises the importance of insurance to growth, investment, prosperity, security and its central role in the daily lives of millions of our customers.
And therefore how important it is that our customers get a fair deal: access to the right insurance products, at the right price, in the right way

This means the ABI is more influential than we were. We can increasingly talk with credibility about risk sharing – for floods, pensions, long-term care, sickness and incapacity benefit, or protection. We are listened to and understood when we highlight the dangers of “reckless prudence” and lack of checks and balances in financial regulation. The responsible policies we have long adhered to in respect of long term investment and good corporate governance are increasingly seen as in tune with the times. And our aspiration that the UK remains a leading global centre for insurance is taken seriously.

The UK remains a global centre because UK insurance is a serious, responsible, industry which sets an example in doing the right thing – for customers, our industry, for growth in the economy and for financial resilience in society. This has been the achievement of the ABI and of you, our members.

It has been a privilege to serve as Chairman, working with so many parts of the industry during such an important time for UK insurance. I would like to thank the Board and staff of the ABI, and I am confident that I leave it with the strongest team possible to achieve, much more, under the leadership of my successor as chairman, Tidjane Thiam of the Prudential. Prudential provided the first chairman of the Association back in 1985 and none since. For the UK’s largest quoted insurance group that is too long an interval. Over to you Tidjane, and good luck. There is still much to do.

Last updated 01/07/2016