Comment: Insurers decline a show of humility

Click to follow
The Independent Online
Mark Boleat, head of the Association of British Insurers, is paid to defend the insurance companies who brought us the personal pensions horror show. But even for a hired gun, yesterday's utterances took some beating. Far from making contrite noises over his members' contribution to the great pensions fiasco, he prefers to blame just about everyone else for the problem.

Surprisingly, Mr Boleat was prepared to concede a few points. These were, however, of the variety that are indisputable. Yes, there was some mis- selling of personal pensions and wrong advice was given to opt out of company schemes, he admits. Yes, insurance companies were sometimes guilty. And yes, it is going to cost the industry a great deal in compensation.

But was the insurance industry really at fault? Was it hell. The real fault lay in under-estimating the public's enthusiasm for personal pensions. In other words, it was the buyer, not the seller who was to blame.

His unwillingness to accept the scale of what happened from 1988 onwards and his members' responsibility for it is mirrored in his judgement of what people think about it all. According to Mr Boleat, nobody much cares. This, of course, is what the insurance industry would like to think, but it surely cannot be what Mr Boleat's members really believe.

At a time when it is increasingly clear that the state will not fund decent retirement incomes for everyone, one would expect some humility from insurers, if only so that they can restore confidence in their financial products and take advantage of the revolution in savings attitudes and patterns that must now take place. Speeches like that of Mr Boleat hardly inspire faith or help an industry already held in such low esteem. Nor can the idea of compelling the nation to invest in private pensions, given a fresh airing at this week's National Association of Pension Funds conference, really be taken seriously while such nonsense persists.

Setting aside the moral concerns of any compulsory levy that is not a tax, who is to run this national private-sector scheme - the same insurers who have been ripping people off over personal pensions? Not on present form. The occupational pension schemes represented by the NAPF, would not be much of a substitute either. Most people are going to have a real problem with any form of compulsory saving that cannot be inherited, as a pension cannot, regardless of who manages it.

The need to raise awareness about the importance of self-help in providing for old age is urgent and vital. For all kinds of savings organisations and mechanisms, including insurance companies, there is a real opportunity in this. Increasingly, ministers accept the need to extend the tax privileges of pensions to other forms of saving. If they do not watch it, the insurance companies will miss out in the coming bonanza.