Upward pressure on broker commissions and higher than anticipated insurance claims made for a cautiously optimistic insurance sector over the three months to the end of September.
An industry leaving the doldrums but still under pressure compared with other financial service industries is how CBI/PriceWaterhouseCoopers (PWC) sums up the sector in its latest quarterly trend survey.
"Business confidence rose for the fifth consecutive survey, though at a slower rate pace than that reported over the past year," the report said.
PWC describes the growth in profit as strong. It says that while the trend towards profitability is rising, it has not achieved the levels many in the industry had hoped for.
The PWC report also finds that for the third quarter in succession insurers say their operations have been significantly affected by competition from overseas players.
Competition remains the defining feature of the sector according to the authors, who add that business confidence is not as strong as in the banking sector.
Despite the respondents cautionary tone, PWC believes the industry is in relatively upbeat mood when compared to the gloom reported over previous years. Rate increases across various lines of business have engendered a mood of optimism.
The report is based on qualitive rather than quanititaive research based on interviews of key personnel who are asked for their feelings about the future of their sector.
Broker commissions are expected to rise further in the three months to the end of the year which will mean that increases have been rising continuously for the last two years.
Brokers interviewed for the research reported the largest rise in employment of any segment of the financial sector.
Respondents said they thought they would spend heavily on IT over the coming year.
The main reason for not releasing captial for investment was uncertainty about whether targets could be achieved.
Greater efficiencies remain the biggest single incentive for spending capital whether it be on IT or other areas.
