CBI survey detects optimism among insurers: Cars and Car Insurance UK: Latest Events

CBI survey detects optimism among insurers

A new survey from the Confederation of British Industry (CBI) indicates that there are signs of growth in the UK financial services sector, for the first time since September 2007.

In a joint study with PricewaterhouseCoopers, 32% of firms questioned said that volumes had risen in the three months to early September, while 24% reported a fall.

The result creates a positive balance of 7%, compared with +23% two years ago.

In addition, respondents were more optimistic about the overall business situation compared to the previous quarter.

However, in the life insurance sector business volumes and profitability “disappointed expectations and fell”.

The decline was at a slower rate than in June survey and the value of incomes “grew a little”.

Furthermore, firms expect the fall in business volumes to ease again in the coming three months.

However, the report states “firms are continuing to reduce employment quite heavily and plan to invest less in the coming year”.

Turning to general insurance, profitability grew unexpectedly in the last three months, as business volumes and income values increased, and costs fell.

For the fourth quarter in a row, firms’ sentiment was more positive, although incomes are expected to be down slightly in the months ahead.

As a result, profitability is expected to fall, and “an acceleration in job losses is anticipated”.

For insurance brokers, the volume of business continued to fall over the past quarter, and staff and training expenditures were cut “unexpectedly sharply”, the report states.

Finally, brokers said they plan to spend more on IT and slightly more on marketing in the coming year than they did in the past 12 months.

PWC’s Lloyd’s and London market leader, Gavin Phillips, says: “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.”

In the coming months, Mr Phillips expects headcount reduction and a reduction in discretionary spend to be “firmly on the agenda” with compliance pushing up costs due to Solvency ll and other regulatory issues.

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CBI survey detects optimism among insurers

Category Car Insurance UK: Latest Events

Car Insurance UK: Latest Events

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