Insurance sector sees strong business performance: CBI/PwC

The insurance sector is financially strong, and the number of people working in it is rising, according to the third-quarter financial services survey undertaken by the Confederation of British Industry and PwC.

The survey points to “an overall positive picture for insurance this quarter” and says “business performance is good”, though it also highlights a “gloomier mood in broking”.

CBI/PwC said that general insurance is continuing to spot opportunities in pricing and technology investment, and broking’s revenue and profits remain healthy.

But it warned: “There are some concerns that technology is enabling customer switching and that fickle purchasing behaviour is starting to happen further up the value chain.”

Employment numbers and spending on training in general insurance are rising, said CBI/PwC. But headcounts in broking continue to fall as acquisition activity consolidates back office operations.

Most of the survey’s indicators were positive. For example, the balance of respondents reporting increased business volumes during the quarter, compared with decreased volumes, was +8%. The balance for those planning to increase IT expenditure over the next 12 months was +97%.

CBI/PwC said that surprisingly few organisations in the sector are thinking about the impact of climate change on their business. Things like weather events may have a short-term effect on business in the shape of claims losses, but there are second-order impacts that need to be considered too; compliance obligations could affect firms and their third party suppliers.

Looking forward, CBI/PwC said that insurers will start to take a longer-term view on climate change risk. It added that as technology becomes a bigger enabler of purchasing behaviour, clients further up the value chain will begin to switch more often. CBI/PwC also said that IT investment will focus on new products and services to reach new customers.

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