Pricing improvements and Brexit certainty leads to insurers’ increased optimism: PwC

Improved discipline in pricing and the increased profits this is delivering has triggered a greater sense of optimism among insurers, according to Jim Bichard, PwC’s UK insurance leader.

Bichard was commenting on the findings of the latest CBI/PwC Financial Services Survey published on January 13. “There has been a lot of discipline exerted by corporates and Lloyd’s and this has led to upward pressure on pricing in the past 18 months,” said Bichard.

He added that this upward pressure on pricing is having a positive effect on performance as improved results are leading to greater confidence in the market.

Sentiment among general insurers improved at the fastest rate since 2009, the sector posting a score of +58 in the survey after only very small improvements over the past 12 months.

Partly, this is because the recent general election in the UK also helped bring clarity for insurers over Brexit, he said. “The election brought with it more certainty in relation to Brexit which is something that insurers have spent a lot of time and money preparing for,” said Bichard.

He added that insurers are also starting to benefit from growth in previously under-penetrated markets such as in the healthcare sector.

“There’s a lot of untapped demand in terms of long-term care, and it’s here that insurance can provide a real social purpose. People aren’t getting the cover they need, and the insurance sector now has an opportunity to fill this gap,” Bichard said.

In addition, growth opportunities also exist in the renewables and technology space. Insurers able to embrace new technologies and new business models will thrive long term, he said.

“The real goal is finding synchronicity between people and technology. If insurers can’t crack this and can’t crack the disruptive nature of the insurance market as a whole, then this could be a negative for the industry,” concluded Bichard.

PwC will launch its 23rd Annual Global CEO Survey early the week commencing January 20 which will assess sentiment on issues including climate change, economic growth and the future of digital privacy.