The UK insurance industry has proved its resilience throughout the COVID-19 pandemic as well as the uncertainty of Brexit, Lloyds Bank has said.
The fifth annual Financial Institutions Sentiment Survey released by Lloyds Bank gathers views from major banks, asset and wealth management firms, insurers and intermediaries.
As COVID-19 is expected to change the landscape for insurance businesses, the survey found that two thirds of the insurance areas are planning to embrace technology that supports more flexible working in the long term.
The majority of insurance businesses are less optimistic about the prospects for the financial services industry and the UK economy than they were 12 months ago.
Despite these concerns, seven in ten (71%) expect to maintain or grow revenue in the next 12 months and nine in ten (90%) say their Brexit preparations are on track.
Firms remain committed to environmental sustainability and sustainable finance over the next three years, with 80% saying Covid-19 will have no impact on their strategies.
A new report highlights how Covid-19 is expected to change the workplace of UK insurance businesses, according to Lloyds Bank.
Almost all (91%) insurance businesses plan to maintain flexible working patterns for employees and two thirds (67%) expect to use digital platforms like Microsoft Teams and Zoom to liaise with clients. More than half (57%) will also use new technology to automate more work.
Seven in ten (71%) senior leaders within UK insurance businesses say they expect to maintain or grow their revenues over the next 12 months.
Although this is down from 89% in 2019, the figures indicate many insurance sector leaders expect their business to show resilience despite disruption caused by Covid-19. Nine in ten (90%) say their firm’s Brexit preparations are on track and almost three quarters (71%) plan to maintain current staffing levels or create jobs (2019: 77%).
However, the relative confidence relating to revenue and Brexit preparations comes as insurance firms’ growth expectations for the financial services sector as a whole and the broader UK economy continued to deteriorate year-on-year.
Two thirds (67%) of respondents expect UK economic growth to slow in the year ahead, compared to 61% in 2019. Almost three quarters (72%) expect growth in the UK financial services sector to slow over the same period (68% in 2019).
Despite concerns over the economy and their prospects, firms remain committed to a focus on environmental sustainability and sustainable finance over the next three years, with 80% saying Covid-19 will have no impact on their strategies. Only 5% admit they will focus less on sustainability.
Richard Askey, head of insurance at Lloyds Bank Commercial Banking, said: “A drop in confidence in the financial services industry’s growth prospects compared to last year reflects how insurance businesses are feeling in the midst of unprecedented disruption caused by Covid-19.
“While it’s encouraging to see the sector show resilience on revenue and jobs, economic uncertainty makes the year ahead hard to predict.
“Like the rest of the financial services sector, insurance businesses have spent the past decade de-risking and modifying their models with the aim of increasing their resilience. The next 12 months will be critical as we see how effective those defences are.
“Our findings show that Covid-19 is accelerating the use of technology to help firms adapt to new working patterns. Insurance businesses are working hard to find ways to give their employees the flexibility and freedom to choose how they interact and adapt with each other and their clients to these new ways of working.
“For all the challenges we have faced through the pandemic, one of the most positive steps taken by firms has been the rapid roll out of technology for staff across the sector and the commitment to experiment with new ways of working.”
