Industry
Optimism in the life assurance sector is growing for the first time since the start of 2004, according to figures from the Confederation of British Industry and PricewaterhouseCoopers (PwC).
The Financial Services Survey for the first quarter of 2005, found that insurers reported an increase in life volumes following six months of falling sales with individual business expected to continue to increase into the next quarter, while group business should remain stable. Fee and commission income also increased after two consecutive quarters of decline.
It was not all good news however, as total operating costs rose for the first time in two years and employee numbers dropped for the ninth consecutive quarter. Despite an increase in profitability, growth was significantly smaller than that seen in previous surveys and profits are expected to fall in the next three months.
"The launch of new life products and greater links between providers and distributors led business volumes to increase in the first quarter of 2005," said Clare Thompson, insurance consultant at PwC. "The success of the life market in the next three quarters will be inhibited however by the level of demand for life assurance and competition among providers," she added.
