General insurers are reporting increasing confidence, volumes of business and levels of premium income, according to the CBI/PwC quarterly financial services survey for Q2 2011. However, the industry also sees its profits falling.
The improvement in general insurance sentiment, detected in the previous quarter's survey, is accelerating, with a balance of +29% of respondents now feeling optimistic about their business situation, the survey said.
Not only do insurers believe business volumes grew in Q2 - half of respondents expect further expansion during the summer, the survey found. In support of this, activity with all customer segments is reported to be increasing, marking a second successive quarter of growth across personal and commercial lines.
In addition, premium income is reported to have increased by a balance of +37% - the strongest result since 2007 - and further improvements are predicted for the coming quarter. The CBI said this reflects combination of pricing shifts, including a slight hardening of retail motor rates and an increase in reinsurance premiums following the Japanese tsunami and US spring storms.
However, insurers deem profitability to have fallen thanks to higher operating costs and increasing reported claims, although they do expect this to reverse in the coming mooths as harder rates take effect.
Insurance respondents to the survey said domestic competition is their biggest concern, and the sector remains keen to develop international operations, the survey found. Respondents also expect to spend more on regulatory compliance during the year ahead.
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