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Stephen Sklaroff

Being at the forefront of a trade body representing insurance companies is not easy when when storms are raging over the closure of Equitable Life to new business and the Axa orphan assets case.

But ABI deputy director general Stephen Sklaroff is keen to use this troubled time to encourage insurance companies to rally towards its Raising Standards initiative and build consumer confidence in the industry.

He says: “It continues to be very important for the ind ustry to do what it can in the Raising Standards arena. A lot of my own time and effort has gone into this initiative.

“It is a major step in the attempt to increase customer confidence and encourage them to take out more provision. The number of people who still have not taken out insurance still surprises me.”

Sklaroff will not be drawn on commenting on the Equi table case, believing its circumstances were unique and he says making sweeping assumptions about insurance companies is dangerous.

“It is terribly important when there is this type of press coverage on specific situations that people do not extrapolate the circumstances of one situation to create a general view.”

As a result of the Axa case, which was settled in the life office&#39s favour, the Consu mers&#39 Association has written to the Chancellor demanding the Treasury undertake a full investigation of life office funds and with-profits business.

Sklaroff, however, is vociferous in defending with-profits from attack. He says: “It is up to the Treasury to decide whether it wants to investigate with-profits. With-profits still have an important place in the marketplace and people should not take to generalising the situation.

“I do think with-profits are a very important range of products which bridge the gap between low-risk, low-return investments and high-risk, high-return investments. There is a need for this type of product and with-profits has been successful in addressing this market. Their performance shows they do meet their obligations.”

One of the biggest criticisms of with-profits is the lack of transparency for the consumer that the business has, which has been blamed for policyholder confusion. He admits there are issues to address on transparency.

He says: “The transpar ency issue is an important one and we have made it part of the Raising Standards initiative. Companies trying for accreditation are required to be more transparent about how with-profits work and make them easier for the consumer to understand.

“We are very happy to work with the FSA on the general issue of transparency and we have made strides to improve it. It would be a pity if a useful set of products was tainted by specific situations.”

Although no one would take issue with the insurance industry striving towards high standards, the ABI is facing criticism on the cost of these initiatives, particularly on Saltr.

But again he defends the initiative, saying the reputation of the industry is at stake.

“We never argued there would not be costs involved in implementing Saltr. It is an important and serious investment for a company to consider. But they should look at the costs of not doing it. There are important reputation issues for the industry at the moment.

“Raising Standards dates back two or three years but we are now in an environment which illustrates how important it is that the industry has high standards and is seen by the public to have them.”

Quality marks are not the only project on Sklaroff&#39s agenda. Having only joined the ABI a year ago after seven years at the DTI, he will be kept busy in 2001.

He says: “There are a lot more things on the horizon this year. The launch of stakeholder and European issues – we have to remember we are working in a regulatory environment that is set in Brussels as well as Westminster.

“We are awaiting the consultation document from the FSA and we do try to be involved with discussions with the Government and the FSA giving the point of view from the industry as a whole. We can provide facts and figures that are useful to the debate.”

A nother issue that Sklar off has to take on is gen etic testing and its implications for the insurance industry. The ABI is taking part in an ongoing discussion with the Govern ment committee on the subject, looking at the validity of testing by insurance companies.

He remains undaunted by the challenges. He sees the industry as vital to the country&#39s economy. He says: “Just after I started working here, I was struck after I had started working here just how important the insurance sector is for the economy as a whole. It touches every kind of public policy. The industry employs 350,000 people, which acc ounts for a third of financial services jobs in the UK. There is £115bn of policyholders&#39 money invested in the stockmarket. That is a lot of people putting their money to productive work in the economy.”

From a Civil Service background that includes a three-year stint in the British Embassy in Washington as first secretary for energy, environment and telecommunications policy, Sklaroff has brought a lot of public policy experience to the ABI.

“For one thing, I understand how the Government machine works and, when I am looking at a policy issue, I can work out how to go forward from it. A lot of the jargon is transferable.”


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