UK life insurers optimistic but brokers struggle to grow
UK life insurers are feeling more optimistic than they did three months ago, reporting strong volumes of business in the three months to September, according to the latest CBI/PwC financial services survey.
The same cannot be said for insurance brokers, who reported that growth stalled after more than four years of expansion. Business volumes in general insurance expanded at their weakest pace in two years.
Against this backdrop, both life and general insurers increased their headcount and investment in technology, reflecting an ongoing push for the right skills and platforms to focus on productivity and customer friendly products. All three sectors say they plan to step up their marketing spend.
The report revealed that investment over the coming year will be driven by efficiency improvements, regulatory compliance, providing new services and expanding capacity.
General insurers and brokers are in line with the wider financial services sector in citing concern about competition and the availability of professional staff. Life insurers are most concerned about regulation and level of demand impacting levels of business.
Jim Bichard, UK insurance leader at PwC, said: “There’s a clear difference in optimism levels, highlighting the diversity of challenges and opportunities facing the industry at the moment. Commercial insurers in particular are acutely feeling the impact of the current soft market, with rates arguably at an all time low. A downturn in business volumes for general insurers could be linked to the wider economic climate, as households focus on tightening their belts.
“A number of life insurers have made fundamental structural changes recently as some big players choose to position themselves more in the asset and wealth management space. These are examples of the industry adapting to change and strategic plans being put into action. It is a trend we expect to continue - the traditional life insurance market is changing.
“A positive trend for the industry is the rise in employment numbers, although there is a strong underlying concern about a lack of available talent. As a result, we have noticed a number of firms choosing to step away from permanent employment in some circumstances. Insurers, and the people working for them, are beginning to explore the gig economy by choosing teams with specific skill sets on a temporary project basis.”
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