Broker survey highlights confidence in insurers

by Gill Montia

Story link: Broker survey highlights confidence in insurers

FWD Research, which provides services to the UK financial sector, has been surveying brokers to gain a snapshot of levels of confidence in the insurance sector.

The research, which is based on the opinions of 250 brokers across the UK, revealed that brokers remain confident that the industry is weathering the economic downturn well.

Forty-seven per cent of respondents had not changed their opinions about the strength and resilience of sector since the onset of the credit crisis last autumn.

Asked about the possibility of a top ten insurer collapsing during 2009, 68% said they felt this was unlikely.

However, some respondents had reassessed their views of the industry because of the economic climate.

Of this group 15% were concerned that levels of insurer security have diminished.

A further 10% said they choose their insurer more carefully when placing business and 9% take the time to examine credit ratings.

FWD’s head of research, Ian Winters, believes that insurance brokers remain remarkably buoyant, given the plummeting levels of confidence in other sectors, such as banking.

He adds that this may be “a result of the strength of their relationships with their various carriers, or a sense that insurance is somewhat more recession-proof than other parts of the financial services industry”.

Mr Winters is hopeful that insurers will “recognise the value of this good will in such turbulent times and work with their brokers to maintain it”.

So far, leading UK insurers have managed to maintain comfortable capital cushions despite the financial turmoil and earlier this month the Association of British Insurers (ABI) provided new support by updating its guidelines on rights issues.

Companies now only need shareholders to vote on a fundraising if they are increasing share capital by more than two-thirds, rather than one-third.

The move aims to speed up the rights issue process and help insurers looking to re-equitise during the credit crisis, while borrowing remains both restricted and expensive.

The guidance is not legally binding but does constitute “good practice”, according to the ABI.