Mary Francis is very different to her predecessor at the ABI. Chris Wheal listened to her reflections on her first year in office.
When Mary Francis was working at No 10 for the then Prime Minister John Major, Chancellor Norman Lamont had just pulled sterling out of the European Exchange Rate Mechanism. Everyone in government was concentrating on the economy, on exchange rates and on interest rates.
The self-styled President of the Board of Trade, Michael Hestletine, presented a paper on the poor performance of the UK coal industry and just how much money was being poured in to keep the industry afloat. It could not go on, he suggested, and pits would have to close. With all the other economic factors higher on peoples' minds, Hestletine's plans were given the nod.
It was a disaster. The backlash to Hestletine's plan was huge. In one fell swoop, the Government rehabilitated the reputation of the trade union pariah Arthur Scargill. Hundreds of thousands of people took to the streets to protest at the Government's plans and at the devastation they would cause to mining communities.
It was a lesson Mary Francis, now director general of the Association of British Insurers, will remember forever. It was the example she gave the Airmic conference last week, the day before she completed her first year at the helm of the ABI. For Francis, it was evidence that communication errors can pose some of the biggest risks in today's world. The idea was sound but the presentation undermined the message doing untold damage to the Government's image.
Anecdotes such as this, from the heart of government, lend Francis a credibility few other trade association leaders can boast. When she says the industry has to influence government and get its message across to consumers, she not only means it, but you are left in no doubt that she knows exactly how to do it. To help her, she has recruited Stephen Sklaroff, a PR whizz from the civil service. And she is dismissive of those who grumble that the ABI is being run by civil servants.
"We need the skills to get the message across to government," she says. "It's been a year in which it has become increasingly clear to me that the industry needs to deliver good products and services, but it also needs to tell people about that. The industry increasingly needs the skills of political lobbying and of communicating with the media.
"It's always had to be part of the ABI's armoury, and increasingly it's part of the armoury of the big companies, but all companies and the ABI need to give more priority to these skills.
"In companies large and small, the public relations and corporate affairs people must have involvement at the highest level to feed in what the public perception will be." Francis says to that end, Sklaroff has organised meetings of heads of PR within ABI companies.
Lobbying for change
She claims some success. The industry reacted to the threat of higher personal injury claims with significant lobbying and publicity work to outline the impact such a change would have. The costs would have to be borne by the policyholders in the end and that would mean significant rises in premiums. Such rises have knock-on effects on the numbers of people taking out insurance, with the taxpayer often picking up the bill for those uninsured. "We had to make clear that the people making the decision should make them based on the facts," says Francis.
Other areas too have needed a concerted campaign to inform the politicians. The Government's hobby horse is currently tackling social exclusion and the insurance industry has been in the firing line. Francis and her team had to step in. "It looked as though the Government was going to turn on insurers and the ABI worked very hard to explain just what insurers were doing, such as insurance with rent schemes," she says.
Finger on the pulse
Francis joined the ABI in the middle of the current argument over the future regulation of general insurance selling. When the government first announced that it was minded to scrap the Insurance Brokers Registration Act, her predecessor at the ABI, Mark Boleat, held the conviction that general insurance selling didn't need regulating. Policies were short-term and customers who were unhappy could change each year if they liked, he argued. And there were very few complaints about general insurance, so there was no evidence that the sector needed regulating to protect consumers. The ABI entered talks about setting up the General Insurance Standards Council under Boleat's leadership.
Francis, with her finger on the political pulse, takes a different view. "Discussions about setting up the GISC have been quite prolonged, but we have been quite clear that it is the right way to go, the industry needs strong self-regulation.
That has been endorsed by her mailbag. "What surprised me is the amount of my time that I spend on issues arising in the retail market, particularly life insurance but by no means exclusively," she says. Francis begins with the ABI's traditional argument about why general insurance needs less regulation, but her year-long postbag seems to slowly change her mind. "The amounts of money committed in general insurance products are not as great as in life products," she says. But many people spend more on general insurance than on their pension and life insurance don't they? "Although you may be spending as much on general insurance as on your life products, consumers don't feel the same, they don't feel they are making that long-term commitment. Having said that, the letters coming into the ABI, either direct from consumers or from their MPs, seem to be noting the same complaints as for life products."
Francis accepts that pressure from consumers and government will mean the GISC having to tighten its regime. "It will be essential that GISC remains alert to what customer opinion and market opinion is and I don't think anyone starting out expects the rulebook to be set in stone," she says. "At the ABI, we can see advantages to there being a strong system of regulation that is recognised by the government and the customers." And she hopes the IBRC broker community will join. "I hope groups proud of their tradition, and that goes for the brokers, can play their part. What we are starting off with is the only realistic alternative to FSA regulation."
The pressure for change is growing. Soon, with stakeholder pensions, customers will be able to switch provider, free of charge, as often as they like – even easier than switching general insurance providers each year. On the general side, insurers will increasingly offer open-ended policies, based on monthly direct-debit contributions and with no annual renewals. On top of that, Francis says: "There are more assertive consumers now."
On the life side, the ABI has been working on a quality standard for Saving and Long Term Risks (SALTR), that will have an independent panel adjudicating and awarding the standard to companies' products. It could reduce the regulatory burden, Francis says. "The FSA has a risk-based approach. Where an industry or a company can demonstrate that they need a lighter touch, they will get it." The ABI's long-awaited claims-handling code will be the next big thing to emerge but Francis says the organisation is sitting down to work out future priorities.
Francis plays to her strengths, which are getting well-briefed on a topic, taking it to government and influencing the right people. She would appear to have been successful at that so far.
