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Daily Insurance Industry News
Monday 19th of February 2018
July 4, 2011

CBI: Life and general insurers report income growth

by Gill Montia

Story link: CBI: Life and general insurers report income growth

Volumes of business across the UK financial services sector grew in the three months to June, but at a slower pace than in the last three quarters, a new survey from the Confederation of British Industry (CBI) and PricewaterhouseCoopers (PwC) shows.

Overall, growth was at a slower pace than in the last three quarters, but the value of fee, commission or premium income rose “strongly” for the second quarter running.

Numbers employed across the sector rose unexpectedly, at the fastest rate since the financial crisis began in September 2007, according to the CBI / PwC Financial Services Survey.

Turning to the insurance sector, life insurance business volumes increased for the sixth consecutive quarter, with higher incomes from premiums and a rise in the value of new business.

Average costs fell and profitability rose, with similar outcomes expected next quarter.

Meanwhile, general insurers reported their fastest growth in business volumes since March 2008, and higher premium income.

Costs increased, even though numbers employed were marginally lower, and profitability decreased moderately.

The study also found that the trend in the value of insurance claims in the past year was higher than its long-run average, for the fifth consecutive quarter.

In the insurance broking sub-sector, respondents reported a fall in profitability amid a second quiet quarter for volumes.

Profitability is expected to fall again, with volumes, next quarter, but numbers employed increased and are expected to grow faster next quarter.

Brokers also plan to invest more in the year ahead on IT systems and marketing expenditure.

PwC UK insurance partner, Armoghan Mohammed, says: “There are encouraging signs for the life insurance sector, as business volumes and new business are both increasing.”

He adds: “Given this positive backdrop, the sector has allowed operating costs to rise for the first time since before the financial crisis and is continuing its hiring spree.”

On general insurance, Mr Armoghan notes that profits are still suffering due to higher operating costs and inflated claims levels.

 

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