Everywhere there are signs that the insurance cycle is on the turn. Sadly, though, signs are just as evident of how far the wheel must turn before acceptable profitability returns to the sector.
Take this week's CBI/PricewaterhouseCoopers financial services survey. It is full of contradictory pointers. Apparently, the volume of business for general insurers grew significantly over the past three months - which was contrary to what had been expected. Yet insurers feel current business levels are well below what they would expect at this stage of the economic cycle.
Again, business volumes overall have grown since the middle of the year; but in that period, business with industrial and commercial companies fell, and is expected to fall further in the next three months.
To add to the pressures on insurers, they are paying out relatively more in commission to brokers - though not many brokers would necessarily recognise that finding. And their total operating costs rose over the past three months, against expectations of a significant fall. A similar increase is expected in the next three months. Increased claims are to blame for the recent rise - no surprise there, the industry has been asked to shoulder a heavy burden recently.
This is not a particularly inspiring picture for insurers. But there is a palpable feeling of optimism out there, and it is not purely based on the premise that the darkest hour is just before dawn. Personal line premiums are on the rise. So are fleet premiums, dramatically. And even in employers' liability and commercial property, there are very faint signs of improvement in the market - though it must be said, some large claims are also on the way here.
Significantly - and this is no straw to be clutched at, this is for real - insurers are taking far larger net lines, rather than piggybacking on the reinsurers.
For brokers, the picture according to CBI/PWC is already more rosey. Business confidence rose for the fourth consecutive survey, but at a slower rate than had been expected. Overall profitability rose, also for the fourth successive survey. And the level of employment increased again, with the expectation of further expansion over the next three months.
The challenge now for insurer and broker alike is twofold: how to select only the very best risks to deal with; and how to invest wisely in IT that will deliver new efficiencies which drive straight through to the bottom line.
In pursuing these goals, both sides will be served by a cessation of the merger mania that has blighted the industry these past few years. It is high time everyone got back to the real business of insurance.
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