Professor Patrick Minford reflects on our survey of issues facing the industry
"There is strong concern over customer retention," said Professor Patrick Minford of Cardiff Business School, following a survey by the WDA and Insurance Times.
Minford revealed that 94% [of respondents] said it was very or critically important to future growth."
He added that there was less worry over foreign competition, "55% thought impact from international entities would be low or very low."
Among key home competition 82% thought that the main 'moderate' to 'high impact' threats were:
The planned response to such threats was skilled staff recruitment and training, with 85% of those surveyed identifying this as "very or critically" important.
On IT issues, 64% identified these as "very or critically" important. Business-to-business marketing was at 58%, with market intelligence at 68%.
On reputational factors, a positive versus negative 88% explained a warmish attitude to FSA regulation, with 32% thinking the FSA had a positive rather than negative impact on the industry's reputation.
The FSA is viewed as quite good for customer service - 26%. But it is also seen as costly - 60% saying it had a negative versus positive impact on profitability.
Other views of regulation constraints are, interestingly, that contract certainty is a positive 52%; the motor database 40%; client money 58% and solvency 48%.
But EU Directives evoke negative responses, with a net negative of 32% on customer service; 52% on profitability and 34% on industry reputation.
Minford said: "The EU lies behind the FSA, and the FSA must implement the framework. The question is whether the EU can be improved by lobbying."
He said training and skills retention are seen as a key problem. "Can this be eased by collaboration with local training agencies?
"Distance training can be undertaken, or even commuting for courses, with costs lowered by the local provider."
On outsourcing, most parts of the UK are given good responses: ranked on "consider very or critically important location": Wales 25%, Scotland 15%, North East 14%, South East 13%, and North West 8%.
Minford said: "Wales has invested heavily in infrastructure for the financial community, as have Scotland and the North East. Wales is a dynamic economy.
"By sharing the access and financing of training locally the industry can create a community large enough to hold skilled personnel in the region because of long exposure to the attractive environment and job opportunities."
Brokers and other intermediaries made up 48% of the survey respondents, with insurance companies representing a 16% share.
