CBI/PWC survey insurer profits up but bad news for brokers
General insurance sales increased and costs fell, leading to higher profits in the past three months, but jobs losses are expected, a Confederation of British Industry (CBI) survey reports.
The survey by PricewaterhouseCoopers (PWC) said that for the fourth quarter in a row, firms' sentiment was more positive on three months ago. Next quarter, however, volumes are expected to level off while incomes are expected to be down slightly. Profitability is expected to fall, and an acceleration in job losses is anticipated.
Insurance brokers
- Broker business continued to fall over the past quarter, led by lower business with private individuals.
- Numbers employed and training expenditures were cut unexpectedly sharply
- An increase in spreads offset an increase in total operating costs, enabling profitability to increase a little.
- Brokers plan to spend more on IT and marginally more on marketing in the coming year than they did in the past 12 months.
Gavin Phillips, Lloyds and London market leader at PricewaterhouseCoopers LLP, said: "The run of confidence continues for general insurers as optimism appears to be encouraged by the general economic environment. However, the sector retains a degree of caution as the outlook for profitability and premiums is uncertain and the level of customer activity is expected to decline.
“As a result, headcount reduction and a reduction in discretionary spend is firmly on the agenda. Compliance will however see an increase in spend due to Solvency ll and other regulatory issues.
"Taking cost out of the business is a strong theme with many planning to take job cuts further. Compliance remains a significant driver of spend as concerns around the potential impact of regulation grow."
