The quarterly, June 2019 Financial Services Survey from CBI and PwC reveals that insurance companies are increasingly optimistic in light of opportunities to improve customer service and to capitalise on merger and acquisition (M&A) deals.
The latest quarterly survey from the pair was conducted between May 14th and June 17th, and includes responses from 79 companies.
Responses from the survey show that while growth potential has been strengthened in the broking sector as a result of closer customer relationships, in general insurance, business volumes actually fell against expected growth and this is expected to drop further over the next quarter.
Ultimately, CBI and PwC say that this might mean that improvements in broking services may not translate into business for general insurance companies, which is a concern. Conversely, explains CIB and PwC, the low mood amongst life insurance market respondents appears to be mismatched against growing profitability.
Insurance Leader at PwC UK, Jim Bichard, said: “The story across the insurance sector is a slightly more upbeat one, however it is a game of two halves. On the one hand you have more than decent growth in broking volume and profitability. This underlines the importance of the intermediary role that the broker plays in owning the customer relationship, which is integral to success.
“By contrast, business volumes in life insurance fell and of course there are Brexit challenges, and this comes from both the second-order effects on their customers, and the overall impact of the UK leaving the EU, on the confidence of the wider market.
“Over the horizon we will see broking focusing on winning new customers and growing the domestic market. In life insurance, we’ll see heavy investment in IT to try and reduce operating costs and boost profitability.”
In a need for cost savings, hiring levels in broking declined in the quarter and while in general insurance and in life insurance hires remained flat, this is also expected to fall.
According to CIB and PwC, the broking sector is focused on opportunities to grow market share via technology and increasing M&A activity over the remainder of 2019. The pair add that the life insurance sector is looking to diversify its offering and is the only sector looking to international markets for growth, while in general insurance marketing spend has declined as the focus shifts to customer retention and brand consolidation.