Determined to set the wheels in motion for an uprising to drastically change consumer perception of the industry, Otto Thoresen tells Lucy Quinton his plan of action
Softly spoken Scotsman, Otto Thoresen, is a man to look out for. If not for his engaging smile and accent then for his newly penned review, dubbed The Thoresen Review – out at the end of this year and set to revolutionise the way the financial services sector is perceived by consumers for generations to come.
Like so many of his contemporaries, Thoresen confesses to falling into the industry by accident as he had initially planned to do something with his mathematics qualification.
Early on in his career, Thoresen found that he possessed two invaluable skills – communication and interpretation – which he has capitalised on.
"If you can find a way for people to understand the complex things in the industry and give them something to engage with, that's a real skill," he says.
Thoresen has worked for a number of companies over the years, including a stint with Royal Insurance on the Isle of Man; running its offshore business and learning what being a chief executive was all about.
He was also involved in the Guardian Royal Exchange acquisition back in 1999, where one of the attractions for Aegon UK was the acquisition of the protection market expertise, particularly in underwriting.
Thoresen tactfully describes his time as finance director in 2000 as a "fascinating" period, when the market watched the FTSE fall dramatically. In 2005, he took over the reigns as chief executive and has found the experience a "privilege".
The way Aegon works globally, the chief executives of the different countries have total autonomy on how they develop their business subject to meeting the financial targets, he explains. "You genuinely come into work in the morning and can decide business strategies and priorities and how resources should be allocated across different businesses," he says.
He and Aegon clearly agree with each other – with financial performance of the UK business in 2006 reporting record sales and profitability.
Thoresen says his main job is to motivate and help people understand the direction in which the business is growing. "It's about giving people a sense of excitement about the journey they're on and the money they get paid every month," he adds.
Thoresen has an optimistic outlook for the protection market but says "it has been neglected and continues to be neglected a little".
"In truth, what still seems to be missing is the consumers' understanding that one of the staples in their planning for life should involve insurance in the same way as they would insure the contents of their house or buildings. One of the things we need to move on with is helping them understand there is a service that can be supplied that is relatively easy to understand," Thoresen says.
The Thoresen Review, due out at the beginning of 2008 with an interim report this autumn, will focus on how a system of generic financial advice may be made to work in practice.
Following calls for evidence earlier this year, he has looked at various angles such as the National Debt Line and conducted some visits, like going to visit NHS Direct. He says this is very much a different sector but much the same telephone-based organisation – helping people and giving them guidance on what their symptoms may mean – that could be adopted.
The interim report will attempt to be as specific as possible about what looks like the right way to deal with delivery; what the scope of the service should be; how far it should go towards regulated advice; how consumers should be engaged with to come and use the service; what the target market is; what will happen to them once they have been given the guidance; how to make sure there is a fighting chance that they do something about it; and how the service will work with the pension reform changes that are on the horizon.
Work is ongoing at the moment, including meetings with consumer focus groups. "We have a clearer idea about some of the elements that we would like to weave in to the service, we want to test this onto real people," he says.
Piloting will begin around October/November time when delivery methods will be tested. "We will have some real people engaging with some real generic advisers and see how practical it is to take people from a position of confusion to one where they can decide what they want to do next," Thoresen says.
Currently, the Financial Services Authority and others are doing a lot of work to raise the quality of financial education in schools, trying to give people access to information in the workplace and in further education. In addition, there are services around for people when they have hit a crisis point. However, Thoresen explains that there is nothing that can loosely be termed as "preventative" that would give people access to "guidance, information and help before they get to the point where their options have been closed off and there are still steps they can take to ensure they are more confidently in charge of their future".
Thoresen says the idea is to put in place a service available to everybody, but specifically for people who are at that point where they are struggling to take control of their finances. He says it will include budgeting and debt management but also the industry has a part to play.
"The industry has to think about simplifying the way it communicates, think about making its propositions more appealing and do more to engage with consumers," he says.
Looking at the concept behind The Thoresen Review from an overall perspective, the idea is to create a joined-up approach where children leaving school with a better basic understanding of financial issues could connect to a service that they can use for the rest of their lives. However, Thoresen admits this may be a challenge for some of the generations who have not had the advantage of the educational support but says this is a long-term policy. "For the industry, this will mean bigger demand, more demand and better-informed consumers that will be able to tell the difference between a good and a bad service, so, therefore, if you are providing a good service you will be recognised for that and volumes of business will increase," he says.
The remit of the review is "how" a national approach to generic financial advice can be put in place, not "whether" it should be put in place. More details of this will emerge after the piloting in the autumn. Thoresen says, however, that, in five to 10 years' time with the advancement in digital media, people will be engaging far more easily, not just through the PCs but also through the television. He says it is important for these two delivery channels to work because it will keep the cost of the service at a level that will keep it economically viable.
In addition, Thoresen says the bigger unknown is how to make people use the service. "A good service that is seen as impartial that people have good experiences of, will do wonders via word of mouth."
He says that his greatest challenge has been taking on this job, but, from the way he passionately talks about his role and this review, it is just possible to believe that perhaps the future is not all that bleak after all with him involved.
The news that the ABI and British Medical Association (BMA) agreement on GP report (GPR) fees has broken down will usher in a period of uncertainty.
Lack of innovation investment in the UK insurance market has been highlighted by recognition of RGA's work in the US.
Protection business in 2012 and 2013 will be affected by events this year and some fundamental changes to the way customers policies are priced into the next. Richard Verdin explains.
Employee assistance programmes are in the spotlight due to a schizophrenic approach by government. But as Sue Weir points out, they are backed by solid research.
How will people buy insurance in future? Greg Becker visits the US for developments in online distribution.