CBI: life and general insurers more optimistic and profitable
by Gill Montia
The latest Financial Services Survey from the Confederation of British Industry / PricewaterhouseCoopers (CBI/PwC) shows business volumes growing for the eighth quarter running in the three months to March, and at well above the average pace.
For life insurers, volumes increased for the ninth consecutive quarter and further growth is expected in the next three months.
Income only expanded modestly but stronger rates of growth are forecast and firms reported an unexpected rise in profitability and optimism.
There was also a rise in headcount, with a further increase expected in Q2, and investment intentions among life insurers would appear to be above average.
Optimism amongst general insurers rose modestly over the three months to March as business volumes expanded slightly for the second consecutive quarter, although growth is expected to accelerate during Q2 2012.
General insurers’ profitability rose strongly in Q1 with average commissions, fees and premiums paid rising at their fastest rate since December 2010.
The trend is expected to continue next quarter.
For insurance brokers, optimism rose in the three months to March despite business volumes falling for the third consecutive quarter.
The decline was at a slower pace than in the previous two quarters and volumes are expected to grow strongly in the three months to June.
Brokers’ overall profitability rose for the first time in a year in Q1, albeit modestly, and is expected to rise again at a slightly faster pace in Q2.
Insurance brokers are preparing to spend more on IT in the year ahead, driven by a need to increase efficiency/speed and by replacement.
Mark Stephen, UK insurance leader at PwC, comments: “This positive backdrop has given insurers the confidence to start hiring again – a welcome reversal after two quarters of headcount reductions.”
He adds: “However, the commercial sector is an area of concern as business has fallen to disappointing levels.”