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UK insurers invest in tech as competition from startups heats up, survey finds

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UK insurers invest in tech as competition from startups heats up, survey finds

U.K.general insurers are expected to see a drop in overall profitability in thenext three months, while life insurers will see a slowdown in profit growth,according to the latest financial services survey by the Confederation ofBritish Industry and PricewaterhouseCoopers, released March 29 and includedresponses from around 40 players involved in the insurance industry.

The quarterlysurvey was conducted between Feb. 16 and March 4

Generalinsurers mainly cited increasing costs and low returns on investments as thekey factors hampering profitability, rather than premium levels or businessvolume, which are both expected to increase.

Lifeinsurers are less optimistic about revenues, with income from fees and premiumsexpected to fall over the coming quarter.

Competitionhas emerged in the survey as one of the more significant factors limitinggrowth, particularly within general insurance, given the rise of so-calledstartup "insur tech" companies. Incumbent insurers say they areresponding by investing heavily in technology to reduce costs andinefficiencies, as well as to help roll out new products and reach newcustomers.

Regulatoryspending, meanwhile, continues to be a key driver of CapEx for insurers,particularly general insurers.

Generalinsurance respondents said they expect much of their growth to come fromgaining new business in the U.K. over the next 12 months, while life insurerssaid they are looking to expand their international client base.

Bothgeneral and life insurers said they will ramp up headcount over the nextquarter.