UK insurers remain upbeat on outlook and ready to hire: PwC
UK insurers remain largely upbeat on the outlook for business volumes and regained some confidence on their margin outlook, while still naming inadequate return as a barrier to capital deployment, a quarterly financial services sentiment survey from PwC has indicated.
“Having been one of the most optimistic sectors for much of 2022, sentiment among insurers fell in Q3,” authors wrote. “However, volumes and returns rose in Q3 and insurers expect to sustain these gains in Q4.”
Forecasts for business volumes remain tipped to the optimists, with a net 46% expecting improvement. But that majority has shrunk for the second consecutive quarter after a peak in March 2022 and is now at its lowest level in over a year. Business volumes over the past three months proved strong, a net 70%.
The margin outlook improved after a heavy dose of bearishness as recently as the prior quarter. A net 10% reports having gained margin in Q3 versus 2/3 saying decline in Q2 and forecasts for the coming three months recovered handily to tip fractionally to the optimists.
“A high proportion of insurance revenues are insulated from movements in the wider economy,” survey authors wrote, citing hard markets across segments.
Capital deployment, be it to underwriting or CAPEX, is most likely to be hindered by the threat of inadequate returns (named by 40% of participants) or by lack of labour or management (also named by 40%). Those factors eclipsed uncertainty over the outlook for demand and business conditions as a leading inhibitor.
CAPEX spend is seen rising for a light majority of respondents, albeit that represents a collapse in spending growth for IT which had been accelerating almost universally end-Q1 and still for 2/3 of the panel at end-Q2.
“Our survey highlights much slower growth in systems investment following several years of significant increases,” authors wrote. “Many insurers are also struggling to make headway in capitalising on the benefits of the new technology they’ve put in place.”
Insurers stand out as the only financial services segment ready to step up recruitment, the survey showed. A net 31% of surveyed insurers claimed an intention to increase headcounts over the coming three months even as just over half claimed to have upped headcount over the past three months.
Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
