A survey from the Confederation of British Industry and PricewaterhouseCoopers shows that the number employed in the sector fell by 41% in Q1 2009 – the steepest rate of decline since June 1993.
And the CBI and PwC expect to see a similar decline the next three months, predicting a fall of 38%.
Staff turnover dropped for the fourth consecutive quarter, reflecting nervousness about switching jobs and a shortage of vacancies.
Also, two-thirds of businesses think the UK has become a less competitive financial services centre as a result of the credit crunch.
Ian McCafferty, chief economic adviser to the CBI, says: “In the past six months any hopes of the pain easing have been dashed but conditions in the sector are not uniformly bad – many general insurance firms have fared quite well.”
Despite an expected upturn in the number of GI claims, the survey indicates this is manageable.
Incomes and business volumes in the GI sector both grew in Q1 2009 and GI firms appear to be bucking the trend of gloom, looking to boost staffing levels.
Andrew Kail, UK insurance leader at PwC, says: “GI firms feel more confident than at any time since 2005.
“Companies are expecting to grow their personal and commercial cover lines and new customers are being seen as the most promising source of growth.”