The report said there is an increasing focus on customer acquisition, supported by highly encouraging employment trends and continued investment in insurance systems and technology.
The study added that the industry was becoming increasing reliant on technology and systems capacity is seen as an increasing threat to business development - although firms are responding by spending on new solutions.
“The wide range of motives for this expenditure reflects the central role that technology plays in most financial services businesses,” the report said. “They include greater capacity, digital distribution, cyber security and operational efficiency. From a UK-wide perspective, this programme of investment should help to ensure that a number of regions feel the benefit of the industry’s recovery.
“Unfortunately, growth is not the only item on the industry’s agenda. Regulation remains a major concern, and is seen as an increasing driver of investment costs. Responding to the requirements of tougher conduct regulation is a particular priority for many firms.”
Despite concerns around regulation, the report said overall optimism in the industry suggests the long-term outlook for profitability could improve as the economic recovery gains momentum. It added: “If insurers are to capitalise on this, generating new business will be crucial to offsetting pressure on rates.”