Insurers challenged while brokers thrive – CBI survey

Profitability among UK insurance brokers increased unexpectedly in the quarter to September 2010 as both business volumes and fee, commission and premium income grew at the fastest pace since March 2009, according to the CBI/PwC quarterly financial services survey. This followed a small decline in profitability in the previous quarter.

The survey also noted that headcount in the UK insurance broking sector grew at its fastest for two-and-a-half years, and investment intentions for the year ahead “have strengthened noticeably”.

However, the picture for UK general insurers was less rosy, the survey found. Although the sector returned to profit for the first time in a year, and a further rise is expected over the next three months, premium rates, particularly in commercial lines, are under pressure and volumes of business have fallen.

The survey said there are also concerns about competition from within the sector, and as a result, general insurers are shifting their focus away from international growth plans and towards domestic customers.

CBI and PwC reported that general insurance profitability rose modestly, driven by a widening of spreads, and said a slightly faster rise is expected over the next three months. Business volumes fell unexpectedly, they survey found, but are expected to rise over the coming quarter.