UK GI firms’ optimism surged in Q2 – PwC survey

UK general insurers’ profitability rose in the first quarter of 2013 – the first rise since March 2012 – a survey found.

The quarterly Confederation of British Industry (CBI)/PwC financial services study also found that general insurers enjoyed a modest growth in business volumes and number of employees. Strong growth in business volumes is expected next quarter.

The picture was slightly bleaker for insurance brokers. The survey found brokers’ business volumes were flat compared with the previous quarter despite expectations of a strong rise.

However, robust growth in volumes is anticipated next quarter, the survey found.

PwC’s UK insurance leader Jonathan Howe said: “The general insurance sector reported the strongest growth in optimism in two years – a marked turnaround from the previous quarter.

“As hoped, insurers have seen a welcome increase in corporate business. Although retail activity has remained steady, there are growing hopes that it will accelerate as the economy recovers.”

He added: “The sector has had the strongest increase in profitability since 2008 owing to a number of factors, including a fall in the value of claims. Expectations of a further decline over the summer suggest that the industry’s investment in claims management may finally be paying off.”

However, Howe also pointed out that the industry continued to face challenges. He said: “Premium income has failed to meet expectations, suggesting that pricing remains under pressure. Investment income has also fallen for the fifth quarter in a row, reflecting the effects of exceptionally low bond yields.”