Quarterly survey shows fall in business volumes
Profitability among insurance brokers rose for the fifth consecutive quarter, but at a markedly slower rate than had been expected, according to the latest quarterly CBI/Pricewaterhouse Coopers financial services survey.
The quarterly snapshot of the sector says that the increase in profitability happened despite a fall in business volumes for brokers.
There was a rapid increase in numbers employed in the sector, with the first growth in headcount in two years. A further, faster increase is expected in the next three months, according to the survey, which covers the three months to the end of March.
And brokers’ investment intentions in marketing and IT are now at their strongest since June 1999 and September 2002 respectively.
But amongst general insurers, optimism fell for the first time since September 2008, as a result of a sharp decline in business volumes, income values and profitability.
The survey shows “particularly strong declines” in volumes of business with private individuals and industrial & commercial companies.
But employment rose slightly for the first time in three quarters, and investment intentions for the year ahead are no longer negative.
Andrew Kail, UK insurance leader at PricewaterhouseCoopers, said: "Non-life insurers' run of confidence that began at the end of 2008 would appear to have come to an end. As predicted, activity declined during the first months of the year and demand for personal and commercial customers is at the lowest level seen for several years. There is a general feeling in the sector that the favourable trading conditions of 2009 will not be sustained in 2010 as customer retention levels are falling, investment returns have stabilised, claims are expected to increase and many insurers are struggling to secure rate increases in a very competitive environment. At the same time, insurers are also dealing with the increased cost of regulation associated with implementing Solvency II.”
Across the UK financial service sector as a whole, activity was broadly stable over the past three months, which was better than expected, with hoping to see much better growth in the next three months.
