Confidence among general insurers is bouncing back and while optimism among life insurers remains flat, this is a significant improvement on the sharp dips seen in recent quarters, according to the latest CBI/PwC Financial Services Survey 2020.
The stark turnaround in sentiment could pave the way for an acceleration in customer-led transformation, however, there continue to be bumps in the road ahead from regulatory interventions to the uncertain trajectory of economic recovery.
Having fallen in Q1 and Q2, general insurers’ optimism about business prospects has seen the biggest rise of any financial services segment in the survey. This is 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.
Insurance brokers are now reporting rising confidence and profit expectations, and although life insurers are less positive, they too report that volumes are only 2% down on normal, while anticipating significant increases in business over the next three months.
In terms of how they anticipate their business transforming, life insurers see regulation as by far the biggest disruptor, with an additional strong focus on cost reduction - ahead of product development and responding to changing customer demands. Insurance brokers see both changes in regulation and customer preferences as highly disruptive.
Across the board insurers placed a prominent focus on diversity and inclusion as areas in which they hope to drive change, they also plan to continue prioritising technology to both enhance customer experience and maximise efficiency.
Alex Bertolotti, UK Leader of Insurance at PwC UK, said:
“The results provide valuable insights into insurers’ progress on transformation and how they’re looking to steer through these challenging times.
"While efficiency and risk management are clearly critical, transformation strategies must keep pace with changing customer expectations.
"That 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.
"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.”
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