Insurance sector in ‘buoyant mood’ as expectations of growth improve – Lloyds Bank

Over three quarters (77%) of surveyed insurers said that their expectations for business growth over the next year had improved since last year.

That was according to the ninth annual Lloyds Bank Financial Institutions Sentiment Survey 2024, published this week (2 October 2024), which collated views from more than 100 senior decision makers at insurers, banks, financial sponsors, wealth and asset managers.

The bank’s survey spotlighted opportunities and issues impacting insurers and also highlighted the importance of artificial intelligence (AI) as a business opportunity.

It also revealed that 57% of insurers believed that greater political certainty would increase the likelihood of increased investment in business.

Around a third of insurers (32%) thought there would be an increase in capital raising over the next 12 months while, in comparison, 55% said there would be no change with regards to last year.

Richard Askey, managing director and head of insurance at Lloyds Bank, said: “The insurance sector is in a buoyant mood, with both life and non-life sgements of the market positive about the next 12 months.

“A combination of strong investment portfolio returns, robust premiums and a positive outlook for capital returns is creating a sense of optimism.”

Askey added, however, that “headwinds do remain” in the market, with insurers needing to “remain vigilant as the year progresses”. 

AI opportunities

Lisa Francis, managing director and head of institutional coverage at Lloyd’s Banks, added that technological innovation could continue to drive growth in the sector.

She explained: “The industry’s resilience will be tested, but firms are proactively investing in transformative technologies like artificial intelligence [AI] to drive innovation and sustainable expansion.”

Lloyds Bank’s report added that AI’s impact was “already tangible”, citing survey findings that showed 32% of businesses reporting enhanced productivity and 21% noting a “competitive edge” from the technology.

Findings also showed that nearly two thirds (63%) of financial institutions were now investing in AI compared to under a third (32%) in last year’s report, which “underscores a growing recognition of AI’s potential to drive competitive advantage and productivity”. 

Of the surveyed institutions, 46% had established dedicated AI teams to explore use cases, which 39% were exploring partnerships with AI firms.