What are the broader implications of Skandia's resignation from the Association of British Insurers?
Andy Milburn, Munich Re
The question has to be broken down into chunks. As far as the protection market is concerned, Skandia is not seen by many as a major writer of protection business so the impact of it leaving the Association of British Insurers (ABI) on any work in that area being undertaken by the association will probably be minimal. However, Skandia is a major player in the pensions and investments markets. Its lack of future involvement in ABI initiatives covering those areas could have major consequence as Skandia is well regarded for its investment propositions and processes.
What this does highlight is a wider issue that many in the industry have discussed for a while now. The ABI's role is to promote the views and defend the reputation of insurers. Therefore, the ABI's consultations will always focus on insurers and the view of the majority. Do we need to get other stakeholders involved in consultations such as advisers, networks, direct distributors and consumer groups? The answer I hear from the majority of people I meet is 'yes'.
At present, Skandia's withdrawal of support from the ABI means little to other protection providers as the former is focused on other markets. If other providers leave the ABI in future for different reasons, then that could have a much bigger impact on the protection market and the ABI's role within it.
Andy Couchman, Bank House Communications
This depends on your individual viewpoint and on what the move may preface.
The ABI has long been the main body representing the industry - or at least the providers - but it has never had 100% membership and probably never will. Nor does it represent other interests such as advisers. It has also come in for a lot of stick about how effective it is in getting the industry's wider messages across. That said, it has an impossible task, simply because it represents such a broad section of the industry and, inevitably, different sectors have different viewpoints and interests. Most of its work is also, of necessity, transacted behind closed doors and it is hard to measure success when that can be as simple as a possible government policy never making it into the public arena at all.
Skandia is certainly to be applauded for so publicly supporting independent advice, but the question is whether it is better to lobby from inside the tent, or outside it. In supporting the Association of IFAs, Skandia is clearly identifying with advisers and that is commendable. But an even bigger issue could be whether other providers follow suit and leave the ABI. If that happens, it could be bad news for the industry, not just the ABI, because governments will not listen to a fragmented industry that cannot speak with one voice.
It is too early to call at this stage, but Skandia's move is either brave and necessary or foolhardy. Only time will tell which it turns out to be.
Roger Edwards, Bright Grey
When a company like Skandia breaks its ties with an organisation like the ABI in such a public way it is easy to assume that there are serious issues going on. This somewhat echoes the recent BBC furore over the antics of Brand and Ross. The outcry following their radio show was hyped to represent almost a revolution by the public about paying their licence fee to the BBC which does not care what individual customers want. A similar reaction could be inferred here where the provider is demonstrating its frustration over paying its membership fee to an industry body but is not getting what it needs out of the relationship for that financial commitment.
The truth will go deeper and include issues that are not in the public domain. The ABI has to represent a very wide, diverse industry that includes general insurance, protection, investments and pensions. Because of such a remit, some members will not always be happy. My own frustration has been voiced in the past on the change in direction of income protection.
But, on the whole, the ABI represents the industry well and the interaction between its members and the board through the various committees is the best way to ensure that everyone is happy that their areas of concern are being addressed, albeit slowly.
However there is no smoke without fire and the ABI probably should check that it is listening to the needs of all its members. It would be sad if Skandia was to set a precedent.
Bob Riach, Riach Independent Financial Advisers
Skandia views itself as different from more traditional life insurers and feels that there is a lack of alignment with the broader membership of the ABI. It has always successfully offered investment solutions solely through IFAs and I expect will continue to distribute via this route.
The ABI is lobbying for the fair tax treatment of UK savers but Skandia's products have little in common with traditional with-profit providers or bancassurers.
In its response to the Retail Distribution Review, the ABI proposes a third distribution method should be added: assisted purchase.
Skandia believes an assisted purchase process would undermine the value of the financial advice sector and cause consumer confusion. I agree with this as the general public are only just starting to understand the difference of a whole of market adviser. Does the industry really need another layer or is the ABI being pressured into this by the bancassurers?
The ABI views general insurance and investment-related companies as the same type of company when they are actually totally different. The ABI should quickly consider splitting into two categories of company; insurance and assurance before other companies follow Skandia's lead and jump ship.
The present market turmoil means it is essential that the general public understand whether they are talking to a salesperson for one provider or being advised by someone who is truly independent.
