Tuesday 29 March 2016 12:01 am

Insurers predict they will need to cut costs over the next few months as competitors with a technology focus creep into their market place

General insurers expect to see their profitability sink over the next three months, despite also predicting a rise in premiums, a study out today has found.

The survey by the Confederation of British Industry (CBI) and PwC discovered that insurers, particularly those dealing with general insurance, are increasingly worried about competition from startup InsurTech companies and are therefore investing heavily in technology.

"A continued focus on efficiency and the need to dramatically improve the customer experience in insurance is pressing," said Jonathan Howe, UK insurance leader at PwC. "Competition within the industry continues to be seen as a limiting factor to growth and there is an ever increasing threat from start-up InsurTech companies breathing down the neck of incumbents, and who are setting the benchmark for communicating and analysing customer needs.

"These startups are currently small scale compared to the industry but they have the potential to have a major impact."

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In particular, those involved in broking are expecting competition to become fierce over the next year.

Jim Bichard, insurance partner at PwC, added: "Brokers continue to invest heavily in technology and process efficiency in order to ensure they remain competitive and profitable at a time when premium levels are under considerable pressure. We are also seeing significant focus in the industry on data and analytics alongside marketing with a view to developing greater insight around clients and to access new customers."

Meanwhile, those dealing with life insurance are not exactly upbeat about their outlook either, predicting that profit growth will slow over the next three months as income from fees and premiums falls.

Insurers are split over where their new business will come from over the next 12 months, with general insurers expecting to gain more new business from within the UK and life insurers looking to grow their business internationally. 

Both life and general insurers expect to take on more staff over the next three months.