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Daily Insurance Industry News
Monday 24th of September 2018
June 29, 2009

CBI survey detects optimism among insurers

by Gill Montia

Story link: CBI survey detects optimism among insurers

The Confederation of British Industry (CBI) has today published a quarterly report, prepared in partnership with PricewaterhouseCoopers (PwC), which suggests that the UK’s financial services sector could be emerging from the worst the downturn.

While the industry experienced falls in both income and profitability in the three months to June, the rate of decline showed signs of easing and the study reveals that optimism about the overall business situation has risen for the first time in two years.

Insurance companies are the most optimistic, with life insurers reporting the most positive results in sentiment for five years, after seven consecutive quarters of negative outlook.

According to Andrew Kail, UK insurance lead at PwC: “The industry is hoping for a recovery in fortunes following recent rises in the equity markets and some positive news on the housing market.”

He adds: “Expense reduction and customer retention are still the order of the day and there is nothing in the survey results to suggest an upturn in business has yet materialised.”

In fact, general insurers saw business volumes and profit fall over the past three months, despite expectations of strong growth but “continue to feel positive about their outlook”.

The report also notes that firms’ plans to increase recruitment have been ditched and that some general insurers now expect profitability to fall “as the cost of claims will probably increase as the impact of the recession bites”.

For insurance brokers, profitability showed signs of growth during the period of the survey, but at a much slower pace than during the previous three months.

However, job losses declined and brokers expect an increase in profitability to “gather pace” in the months ahead.

In the banking sector, volumes are also expected to rise during the third quarter of the year, although building societies are merely hopeful that income and profitability will stabilise.

Meanwhile, securities traders and investment managers are expecting recent improvements to be short-lived, with falls in volumes likely to resume next quarter.

 

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