Growth opportunities encourage insurance firms to invest in technology

Confidence in the business outlook will see the majority of financial service firms invest in information technology over the next 12 months, according to a new report by the CBI and PwC.

More than half (53%) said they will invest in IT - while in contrast almost a quarter (24%) will cut land and building budgets and 12% will slash spending on vehicles and machinery.

The confidence to invest in new technology may well stem from the highest level of optimism, in the overall business situation, felt by financial services firms for almost 17 years. The report said almost six in ten financial services firms (59%) feel more optimistic, while only 6% feel less optimistic.

This optimism is in part based on strong performance within the sector over the three months to September. Insurance brokers saw profitability increase at its fastest pace since March 2011, while general insurers saw profitability rising at its fastest pace since March 2008. Sentiment among life insurers also rose for the first time in three quarters.

Jonathan Howe, PwC’s UK insurance leader said: “The industry is showing strong signs of recovery in contrast to the low profitability concerns of previous quarters. Firm’s historic concerns around skills shortages are being addressed, with increased headcount which is expected to rise further. The search for growth opportunities is still continuing, with investment in new technologies expected to increase".