Shrinking volumes hit insurer optimism

General insurance is the only financial services sector to report a loss in optimism, according to a PwC poll.

The quarterly CBI/PwC Financial Services Survey tracks optimism across six sectors and found that general insurance was the only one in which respondents were less optimistic in the three months to June than the three months before.

The survey also found that business volumes had fallen for the first time since the beginning of 2013, driven by a decline in business with overseas customers, while competition and demand were major concerns.

Jonathan Howe, PwC’s UK insurance leader, warned that an increase in demand spurred by the economic recovery was unlikely to be sustainable.

He said: “Customer acquisition is becoming a ‘zero sum game’ in the mature UK general insurance market – any wins are cancelled out by the losses. Insurers are looking for new ways of increasing market share other than reducing price.

“General insurers are the only major sector expecting to reduce capital investment. Despite this, investment in technology is seen as increasingly crucial to growth in this highly competitive market.”