CBI/PWC survey says brokers are bouncing back
The Confederation of British Industry (CBI)/ PriceWaterhouseCoopers (PWC) survey reports that business confidence among insurance brokers rose at its fastest rate this quarter since September 1993.
It said business volumes didn’t fall as expected and profitability rose much faster than had been anticipated.
Optimism in the general insurance market rose for a fifth successive quarter, despite further falls in business volumes, values and profitability, the survey said.
Most of the declines had been expected except the bigger than expected fall in investment incomes.
Insurance Brokers
Among brokers, the survey said there had been a decline in employment but brokers expected a reversal in early 2010 with positive expectations recorded for the first time in almost two years.
Andrew Kail, UK insurance leader, PricewaterhouseCoopers LLP, said: “The run of confidence insurers have enjoyed for the past five quarters will be more difficult to sustain.
“The potential increase in the cost of claims, weaker investment returns and the lack of rate hardening has driven the more gloomy short-term outlook. As a result, headcount reduction and a cut in operating expenses seem firmly on insurers' agendas for 2010.
“The sector has also reported low investment plans for regulatory compliance, which is at odds with efforts the industry is making to meet the requirements of Solvency II.”
Financial services overall
Activity in the UK financial services as a whole increased slightly, but the growth was less than expected and firms expect volumes of business to fall in the coming quarter, the survey said.
Ian McCafferty, CBI Chief Economic Adviser, said: "The bounce in UK financial services activity over the past six months is not expected to last as we enter 2010. Firms see their business volumes falling back again, with no further improvement in profitability over the next three months.”
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