General insurers reported the sharp-est rise in business confidence in the financial services sector, according to a joint Confederation of British Industry and Pricewaterhousecoopers survey.

Two-fifths of respondents said they were more upbeat about the overall business situation.

“There is a clear picture of continued optimism,” said Ian Dilks, a partner in Pricewaterhousecoopers financial services.

The general insurance sector reported strong growth in premium income and although the rate of growth was slightly down, 67% of respondents said the value of premium income had increased over the last quarter.

Dilks said volumes were higher than expected, particularly in personal lines. Growth in the market was said to reflect the continuing upturn in a cyclical market and is expected to continue into the next quarter.

Confidence in the market was manifesting itself in projections for increases in recruitment, with the expectation level of employment needs at the highest level in the history of the survey.

Intended expenditure on marketing had also strengthened sharply since the previous quarter's survey.

The value of claims was found to have risen at the fastest rate in the survey's history, mainly due to the continuing flooding.

The main constraint on business prospects in the next year was cited as domestic competition, although Dilks said this had fallen to the lowest level recorded in the survey.