Life insurance sales continued to decline strongly and rapidly over the last three months, with the level of business remaining well below normal, according to a survey of the financial sector.
But the Financial services survey, conducted by the CBI and consultants PricewaterhouseCoopers, noted that there was modest growth in general insurance, with profitability rising for the first time since March 2012. The number of people employed in the general insurance sector also rose, and strong growth in business volumes is expected next quarter.
However, expectations of a strong rise in business for insurance brokers did not materialise, and business volumes were flat.
Jonathan Howe, PwC's insurance leaders, said: 'As hoped, [general] insurers have seen a welcome increase in corporate business. Although retail activity has remained steady, there are growing hopes that it will accelerate as the economy recovers.
'However, there is no denying the sector's challenging revenue environment. Premium income has failed to meet expectations, suggesting that pricing remains under pressure. Investment income has also fallen for the fifth quarter in a row, reflecting the effects of exceptionally low bond yields.'
It was a rosier picture for investment management, with business volumes growing robustly over the three months, the fourth consecutive quarter they have done so. However, the survey revealed that growth is now predicted to ease and expectations in the sector are at their lowest since December 2011.
Paula Smith, PwC's asset management leaders, said: 'Investment managers are more optimistic due to strong improvement in revenues and profitability, with the latter increasing for the sixth consecutive quarter. Firms continue to benefit from the comparative stability of financial markets, as well as the year-long recovery in equity values.'Encouraged by this, investment managers continue to allow operating costs to climb, although the pace of growth appears to have slowed with employment levels being the highest since 2010.'