Confidence and overall business volumes in the life insurance sector ‘rose strongly' over the past three months to its highest level since the Retail Distribution Review (RDR) was introduced, a survey suggests.
According to the latest CBI/PwC Financial Services Survey operating and marketing costs are increasing as firms relax into this growth and yet profitability is increasing.
Jonathan Howe, PwC's UK insurance leader said: "It's a really positive review for life insurers. Optimism is at a high, and they have seen a large upsurge in business volumes for a second successive quarter. Confidence is now at the highest level since the introduction of Retail Distribution Review (RDR) one year ago.
Employee headcounts increased as life companies prepared for growth. Meanwhile in comparison, general insurers remained more cautious in expenditure.
Insurance brokers also saw business volumes increase, while profitability fell due to increase costs, although this is expected to recover in the next quarter.
Howe added: "Profitability started to grow again, and despite growing marketing and operating costs growth is expected to continue into the next quarter.
"Headcount increased at a much stronger rate than expected although many see the scarcity of professional staff as a barrier to growth. This is reflective of the introduction of the new separate regulators driving the need for staff with different skill sets to manage each and the upcoming Solvency II deadlines.
"Intelligent recruitment will be a key item on Board agendas. Increased investment in IT supports the positivity, as life insurers recognise upgraded systems are crucial for growth in a post-RDR world. "
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