HSBC warns insurers on cost pressures and competition
HSBC is alerting insurers to the likelihood that severe cost pressures and fierce competition could result in mergers and consolidations across the industry, in the months ahead.
In a recent report, the bank’s analysts explain that in the coming months there is likely to be increasing differentiation between underwriters that focus strongly on cost and providers that focus on value and service.
Referring to UK aggregators such as Towergate and Giles, the study predicts that the biggest challenge for many insurers will be to arrest the power of aggregators and demonstrate that insurance is about value and service, rather than just price.
HSBC also expects the industry to face re-regulation and suggests that the Government needs to encourage consumers to buy insurance.
With many seeking ways of cutting back financially during the recession, policies are likely to be cancelled despite a rising threat of unemployment, theft and other crime.
The report also predicts that distributors are likely to benefit from the economic downturn because consumers will be looking to better their premiums.
Category: Insurance News
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