Brexit uncertainty has led to cautious, flat sentiment amongst insurers as the industry braces for volatile trends in business and the broader economic landscape, according to the latest CBI/PwC financial services survey.
However, the survey notes a continued emphasis on investment in technology and training of staff to drive innovation as stiff market competition is on the rise domestically and internationally.
PwC said that in the race to stay ahead, general insurers seek out strategic investment to provide new services and reach new markets and this has resulted in general insurers reporting rising operating costs driven by both ongoing regulatory changes and an increase in headcount and training.
Commenting, Jim Bichard, UK insurance leader at PwC, said; “under pressure and threatened by growing disintermediation, firms are looking at technology and new talent to help show and add value to their offerings. This drive to invest and evolve their businesses is leading to increasing operating costs, a trend we’ve seen decrease over the past six months.
“Looking ahead, tech, talent and the skills appear as strong themes this quarter and nicely support the findings of our recent CEO survey. In fact, more insurance CEOs are concerned about the pace of technological change than any of other industry. Therefore it is reassuring to see insurers maintain focus on their people and technology, looking beyond the uncertainty of today to grow their businesses.
“Even with the safety net of a transitional period being established, Brexit draws ever closer. Insurers and their customers demand the certainty needed to carry on doing their business at home and further afield.”
Pressures on the market are increasing as other sectors of financial services and new entrants attempt to eek out a market share and as this compounds with the uncertain regulatory and trading environment optimism levels have dropped for general insurers; “reading across the broker results, business appears muted,” said PwC.
Nevertheless, it’s not all doom and gloom for the market as firms’ profitability and volumes are up and industry players continue to see opportunities to grow, in particular through organic growth activities and investment in IT.
