Signs of a recovery in the UK’s moribund financial sector are beginning to show, with insurers joining the broader financial sector to post a third consecutive quarter of growth.

In the three months to March, general insurers reported “moderate” growth in business volumes and profitability, matched by a stabilising of costs.

The report from the Confederation of British Industry and PricewaterhouseCoopers also reveals green shoots in the broking sector, where profits are growing at a faster rate than insurance and “bullish” sentiment is pushing marketing and IT investments.

PWC UK insurance leader Mark Stephen says while cost drivers have been mixed, the regulatory spend is increasing as insurers get ready for Solvency II.

“Insurers are struggling to recruit the skilled managerial staff they were hoping to bring on board,” Mr Stephen said.

“The continued low growth rates and intense competition in the UK market is forcing insurers to explore new growth avenues and continue to push for new international business.

“The coming quarter will look quite different as the impact of this quarter’s natural disasters is felt.”