Survey finds brokers less optimistic for next quarter as profits fall
Optimism among insurance brokers has declined over the past three months, according to the latest Financial Services Survey from the CBI and PricewaterhouseCoopers (PWC).
The report said optimism had declined against a background of expected increases in business volumes over the next three months.
But it found that the overall profitability of brokers continued to fall in the third quarter of the year, due to a "substantial increase in costs exceeding a more modest increase in premiums".
The survey said this trend was expected to continue over the final quarter of the year.
Within the broker market, business volumes had remained broadly stable during the third quarter. Business transacted with industrial and commercial companies continued to rise, while business transacted with private customers continued to fall sharply.
The picture for general insurers reflected that of the broker market, with firms becoming more pessimistic about the overall business situation for the second successive quarter.
The survey found that the rise in pessimism reflected falls in both business volumes and profits within general insurers.
"A sharp decline in business volumes occurred as a result of an unexpected fall in business with private individuals," the survey said.
"Volumes are expected to continue to fall over the next quarter, but at a slower rate."
The survey said profitability had been hit by a steep increase in average costs, falling volumes and a rise in claims.
It predicted that falls in profitability would continue through the final quarter of the year.
Coupled with the poor outlook for profitability, the survey said investment outlook for the industry was also poor, with capital expenditure of all kinds expected to be reduced over the next 12 months.
