Can the pension insurers win back their customers’ respect?

insurers

It’s been a long time since the mainstream insurance companies really spoke for their customers.  Nowadays, if they talk to the market, it is with the help of an outside agency. Scottish Widows have recently spoken through the PPI, when Aviva wanted to speak about pension choice, they did it under cover of Defaqto. It is as if they are embarrassed to speak for themselves.

Ros Altmann, apparently speaking to Will Robbins of Citywire, is reported as saying

“Traditional providers must do more to engage savers and not just rely on advisers or government policy to boost business”.

I would whole-heartedly agree. These insurers have abandoned their traditional roles as the moral authority on financial prudence and become “asset gatherers”, the passive receivers of other people’s efforts, reliant on brand for continued success.

Not for the first time , Altmann put her finger on the nub of the problem. Insurers are making minimal steps to promote freedom and choice at retirement. Instead, grimly hanging on to assets

“I have had it from my own experience that the wake up letters people are being given are simply not driving people to Pension Wise, they are driving people to provider’s own in house team”

Altmann is accusing insurers of passively accepting money and passively retaining it, they simply are not engaging with customers along the way so customers end up unengaged, under-educated and disempowered.

It’s a business model that is almost entirely based on doing nothing.


What Altmann stops short of , is a remedy. But remedies are available. Yesterday I spoke at a packed meeting of fiduciaries who cared enough about the subject to listen to me and a colleague berate insurers for their passivity, sloth and failure to promote external governance through IGCs.

Instead of promoting the IGC as reinvigorates of their brands and promoters of the value of strong external governance, IGCs have fallen under the dead hand of procedure, of cronyism and of the conflicts that so beset financial services.

Unless I am missing something, the insurers will soon be counting IGCs as part of the cost of doing business and complaining of them as a Regulatory Burden.

Disengage- under educate and disempower. Hide behind the Regulator and intermediaries, maintain the status quo.

I think this characterises what many people think of insurance companies, including it would seem, our Pension Minister.


IGC’s – an opportunity in danger of being wasted.

IGCs could be the remedy, but they are likely to become part of the problem, unless good people stand up and ask for better. The IGCs were set up as the last chance saloon to avoid the insurance companies being referred by the OFT to the competition commission. They either succeed or the trigger will be pulled.

Ros Altmann is right to turning the screw, we cannot have the nation’s pension legacy being run by suits whose attitude is so cynical and slovenly. Instead we need the kind of insurers characterised by Nigel Wilson’s vision for the investment of our money and talked of often on this blog. A vision which re-engages customers with their investments, educates them on the importance of their savings, both to them and to our country and empowers them to take an active part in managing their finances.

Look to the work Momentum is doing in enabling financial literacy through the use of new technology (MoneyHub). Look at LV with Cora – a means of helping customers take choices at retirement.

These initiatives are rare glimpses of genuine financial innovation, set against a very average background of mediocrity where insurers and their trade bodies the ABI and the AI self destruct as they see their moral supremacy crumble.

If you are interested in the improvement of our financial literacy, our engagement with our money and if you want to see our insurers strong again, now is our chance. The IGCs which have been set up, have so far published only their terms of reference. They are ours to use and not the insurers to castrate.

By the 31st December these IGCs must have submitted to insurers their plans for the publication of their first annual statements in April 2016. To my certain knowledge, they have not consulted with policyholders on this and whatever comes out next April will be without any input from me or any like me.

I am a policyholder, I want the IGCs to speak with me because insurers do not. I want to speak through my IGC both in my capacity as a policyholder and on behalf of those other policyholders I represent through my firms governance committee.

The agenda I have for the IGCs is outlined in the presentation we gave yesterday.

You can download it here

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
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4 Responses to Can the pension insurers win back their customers’ respect?

  1. Michelle Cracknell says:

    I believe that a well informed customer will buy more so insurers should support their customers with tools etc, But, insurers raison d’etre is to sell product. A lot could be achieved if the industry was more honest about this position. There should be a public service to assist customers in financial dealings (debt, pensions and money). Awareness is the best form of customer protection.

  2. Peter Kane says:

    Henry, a thought provoking piece as always. It would be naive to disagree that insurers generally “could do more” but some progressive companies are doing just that. However, I see little merit in the constant “them and us” attitude which is prevalent in the pensions/savings sector. Too many vested interests act against real sustainable solutions or remedies being created, developed and supported as best practice. All stakeholders need to step up to the plate here (providers, advisers, asset managers but clearly so do individuals and sponsoring employers. Just wish more people had a positive ‘can do’ attitude towards the key strategic issue of addressing the savings gap in the UK and encouraging more working together rather than focus almost exclusively on specific tactical problems which are “someone else’s fault”.

  3. henry tapper says:

    a joint approach to problem solving could start by agreeing a common definition for value for money between providers and their IGCs. Then perhaps we could see a common approach to dealing with payroll by adopting common data integration protocols and finally we could do with a common sense approach to pension wise which put guidance first and product second.

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