The quarterly survey of firms shows that within insurance, opportunities to improve customer service and capitalise on M&A deals are boosting levels of optimism.
Broking has been bolstered by the growth potential from closer customer relationships. However, in general insurance, business volumes fell against expected growth and the next three months will drop further.
This could signal concerns that improvements in broking services might not translate into business for general insurers. Conversely, the gloomier mood in life insurance seems mismatched against a rise in profitability.
Jim Bichard, Insurance Leader at PwC UK, said:
“The story across the insurance sector is a slightly more upbeat one, however it is a game of two halves.
“On the one hand you have more than decent growth in broking volume and profitability.
“This underlines the importance of the intermediary role that the broker plays in owning the customer relationship, which is integral to success.
“By contrast, business volumes in life insurance fell and of course there are Brexit challenges, and this comes from both the second-order effects on their customers, and the overall impact of the UK leaving the EU, on the confidence of the wider market.
“Over the horizon we will see broking focusing on winning new customers and growing the domestic market. In life insurance, we’ll see heavy investment in IT to try and reduce operating costs and boost profitability.”
In broking, hiring levels fell in response to a need for cost savings, and in general insurance and life insurance, headcounts are also flat and expected to fall, although there is an upturn in training investment. Speed and efficiency is a priority across the sector and there is also a focus on improving CRM capabilities and delivering better services.
Finally, broking is focussing on opportunities to grow market share through technology-enhanced customer experience coupled with increasing M&A activity over the next six months. Life insurance is looking to diversify its offering to develop and cross-sell products covering more life stages. Life insurance is also the only sector in financial services that’s looking to international markets for growth opportunities. And in general insurance, marketing spend has fallen sharply as the focus moves away from new business and towards retaining customers and brand consolidation.
Notes to Editors:
The June 2019 Financial Services Survey was conducted between 14th May and 7th June. 79 firms replied.
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