Report reveals upturn in UK life insurance market

Monday, May 10, 2010

The first quarter of 2010 has been a positive one characterised by steady growth for UK life insurance companies as was revealed by a survey conducted by the Confederation of British Industry (CBI).

After the positive results from the first 3 months it is expected that the optimism in the industry will carry through to the next quarter as hopes for a future recovery in demand continue increase.

The survey also revealed that life insurance companies in the UK were producing a far greater number of new products for life assurance whilst expanding into new international markets, both activities that made major contributions to improving profits.

For the fifth quarter in a row the report revealed that life assurance brokers were able to demonstrate stable growth whilst avoiding the expected drop in business volumes which in turn has enabled them to create more jobs as they have taken on new staff.

It was not all good news for the life insurance industry, however, as Andrew Kail, the UK insurance leader for PricewatherhouseCoopers pointed out:

"The run of confidence insurers have enjoyed for the past five quarters will be more difficult to sustain. The potential increase in the cost of claims, weaker investment returns and the lack of rate hardening has driven the more gloomy short-term outlook".

Life insurance companies also appear to be focusing on cutting costs in this difficult business climate, especially with the added burden of compliance with Solvency II implementation and other such regulatory challenges that they face.