ABI boss Thoresen: "Industry reputation not high"

ABI director Otto Thoresen has admitted that the reputation of the insurance industry is 'not high' following the financial crisis.

An ABI survey of 57 insurers reveals that their biggest concern is the eroded reputation of the insurance industry, the new regulatory structure and the influence of the EU.

Thoresen, who opens the trade body’s Biennial conference today, said: “The reputation of UK financial services firms was undoubtedly harmed by the banking crisis. Insurers are not banks. Despite this, we have to tackle our reputation head-on and we have a good platform to do this from.

"Consumers recognise the importance of insurance, and every day insurers pay out £173m in pensions and life insurance and £58m in general insurance claims, such as on motor and household. Yet, despite the valuable role insurance plays in millions of people's lives, the public perception of our industry is not high. We need to do something about this."

Key findings on the strengths of the industry show that the top answer is that insurers help customers in their hour of need (39%) and contribution to the economy (21%).

On biggest weaknesses, a third said it was reputation.

Thoresen said: "Unprecedented reforms in how we sell to our customers and how people save present real opportunities to raise our reputation and improve understanding of insurance.

"We need to grasp these opportunities with both hands, and make sure that we create an environment where our reputation reflects our value to society and the economy."

There was also a damning verdict on regulation, with almost half of industry leaders saying the UK’s new ‘twin peaks’ structure would not improve customer trust.

98% of firms are worried about the EU impact on the UK firms, witth around half saying the EU was not clear and coherent in its approach. 57% think the EU intervenes too much in Britain’s financial services.

As for a competitive tax regime, half of industry executives said recent tax changes would not make much difference on their decision over whether to stay domiciled in the UK. More than half of executives failed to put the UK in its top three locations for tax and regulation.

KPMG UK head of insurance Drew Fellowes said: "The insurance sector is undoubtedly facing a period of unparalleled change. It is likely that the industry we will see over the next three to five years will be structurally very different to what we have today. However, with this change comes a unique opportunity for the insurance sector to strengthen itself and become more competitive.

"The survey highlights the need for the industry to reinvigorate its relationship with customers and reinvent its reputation. From a strategic point of view, the big question remains around where future growth will come from - a feat not to be underestimated in these challenging times.

"Regulation has clearly risen to the forefront of the agenda, which comes at a time when many insurers face significant market pressures. As insurers battle through the waves of regulatory change, their challenge is to manage this in line with their strategic priorities and duties to shareholders and customers."