Insurers bullish on market outlook despite potentially challenging 2021: CBI/PwC survey

In spite of the challenging market conditions due to the ongoing global pandemic, general insurers are showing greater optimism about their business prospects and profit expectations in the coming year, a new survey has revealed.

Confidence among general insurers and brokers appears to be bouncing back, having fallen in the first half due to the impact of COVID-19 induced uncertainty. Although life insurers still remain less positive, they too reported that volumes are only 2 percent down on normal, while anticipating "significant increases" in business over the next three months.

According to the CBI/PwC Financial Services Survey 2020, general insurers’ optimism about business prospects has seen the biggest rise of any financial services segment, despite possible challenges resulting from both the Financial Conduct Authority's test case on business interruption claims and its plan to bring insurance renewal prices into line with new customer offers.

Going forward, insurers are hoping to drive change in the areas of diversity and inclusion, while prioritising technology to both enhance customer experience and maximise efficiency.

“The results provide valuable insights into insurers’ progress on transformation and how they’re looking to steer through these challenging times," said Alex Bertolotti, UK leader of insurance at PwC UK. "While efficiency and risk management are clearly critical, transformation strategies must keep pace with changing customer expectations."

The survey further highlighted that the turnaround in sentiment could pave the way for an acceleration in customer-led transformation, however, noted there continue to be challenges ahead from regulatory interventions to the uncertain trajectory of economic recovery.

"These shifts have been accelerated by the impact of COVID-19 cannot be understated and firms that make the most of available data hold the key to understanding what customers really want," Bertolotti added.

"We're seeing changes in customer preferences and behaviour so it makes sense to see these drivers feature strongly in how insurers plan to respond in the future. What's crucial is to turn this appetite for change into progress on the ground.”