New Business Complexity Drives Insurers to Re-Shape Operational Strategies

By Timothy Reilly

The insurance landscape can look gloomy for operational teams – low interest rates, evolving regulatory and financial reporting requirements, and constant technological changes present ongoing challenges. But what if you viewed these factors as opportunities? How are your peers contending with these challenges and changing their operating strategies, risk profiles, and asset management techniques to their advantage?

Stay Ahead of the Curve: Insurance Firms Are Analyzing Processes, Planning For Change

SS&C works closely with many of the world’s leading insurance firms and we maintain an ongoing dialogue about how our clients operate in today’s difficult market, the effectiveness of their current processes, and their plans for the future. In the second quarter of 2015, we conducted the 2015 Global Insurance Asset Management Technology Outlook, surveying 100 insurance investment, accounting, technology, finance, and operations executives. With 32% of responses received from insurance firms with AUM of $50B+, we got an inside look at which tools and techniques the largest insurance firms use to stay ahead of the curve, and what they see as emerging trends.

Key findings include:

  • Insurers are shifting away from internally developed investment systems – This is an overwhelming trend among respondents, with smaller firms leading the charge and larger insurers moving more slowly. The surveyed companies are primarily considering hosted solutions, co-sourcing, and SaaS offerings as viable alternatives to internally developed solutions.
  • Processing new security types is the most cited challenge for expanding firms – The quest for performance is driving insurance firms to seek assets that produce higher returns, creating processing challenges if the right operations and controls aren’t in place. Nearly 60% of respondents are operationally challenged by processing new security types.
  • Cloud adoption growth and technology outsourcing on the rise – With 80% of respondents identifying their cloud strategy as a critical concern, the cloud is at the forefront of many firms’ operational considerations.
  • Maintaining skilled staff and regulatory compliance are top priorities when choosing a sustainable operational model – Firms are looking for staff with investment accounting, performance measurement, and tax accounting expertise. Additionally, firms need talent that understands emerging regulation and compliance and knows how to adapt business models to the evolving insurance landscape.
  • Operational risk and market risk are top concerns – Thirty-five percent of respondents identify operational risk as their chief concern, beating out both regulatory and cybersecurity risk. This shows that the increasing complexity of internal operations has outpaced external risk factors.

Today’s investment operating environment requires agility. With the right people, processes, and technology, insurance firms can react quickly and effectively to change. To learn more about our results and the factors that are driving insurers today, download our survey here:  http://www.ssctech.com/Landing/InsuranceSurvey.aspx

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