Life insurers expect a profitable year ahead with business forecast to continue to grow throughout the first quarter of 2018, however, collective sentiment for general insurers has deteriorated and insurance broking community optimism also nose-dived for the first time in five years, according to the latest CBI/PwC financial services survey.
Life insurers’ outlook is optimistic in 2018, but scepticism is prevalent in the broader UK insurance and financial services community over a range of factors impacting the market operating environment: life and general insurers see the need for a broad range of actions to ensure that the UK remains a leading FinTech and innovation centre.
Among the chief concerns are the need to attract talent, accelerate the digitalisation of services and ensure sufficient investment in technology infrastructure.
Firms also see an important role for regulators and government collaboration and cited accessing talent as a particular concern.
Commenting, Jim Bichard, UK insurance leader at PwC, said; “optimism amongst life insurers reached a 2017 peak in Q4 and also outstripped the rest of the financial services community, reflecting the confidence of the sector.”
He added that after the pension annuity reforms, life insurers have clarity and this has “paved the way for a change in strategy to focus much more around wealth and asset management.”
“Looking at non-life insurance, the impact of business from the wider economy is around cost reduction, leading to sector players reviewing their business footprint, and increasing efforts to ensure greater automation and efficiency.
“The impact of Brexit has manifested itself as a drop in overseas business for the general insurance community, perhaps unsurprisingly given London’s role as an international speciality hub.”
The PwC UK insurance leader said that competition in the broking sector is high from Financial Services business or new entrants and this coupled with blockchain places the brokers increasingly at risk of disintermediation.
To offset disruption risk, Bichard said they’re evolving their business model to focus on advice rather than transactions.
“Focusing on fintech more generally, the biggest hurdle facing the insurance sector is not the availability of fintech or the infrastructure, it’s having the people who understand it. Our clients believe the best way to be more fintech- enabled is to invest in people,” Bichard commented.
CBI-PwC report paints a mixed picture for the UK insurance sector in 2018, with business picking up for life insurers but the broader insurance and financial service sector highlighting the need for further innovation in a range of area to ensure the UK remains a leading FinTech and innovation centre.
Lloyd’s Chief Executive Officer, Inga Beale recently echoed the sentiment of the wider community, stating at the WEF that UK-based industry players can’t cope with the uncertainties caused by Brexit and advocated for open public-private sector collaboration on matters framing the UK operating environment.
