Insurance Industry Investing: Six Key Trends that Drive Operational Decisions

By Lorne Whitmore

As insurance firms search for higher yields, their investment operations are changing rapidly. They are employing new investment strategies that require accounting for an expanding array of non-traditional instruments; this brings with it additional risk.

Regulators continue to demand more and more information on investment activities, and in-house and legacy vendor systems can’t keep pace with the variety of instruments and reporting requirements. Many firms have had to rethink their investment management, accounting, and reporting operations to keep up with the changes.

Here are 6 trends that influence operational strategies:

  1.     Asset diversification – As insurers seek to increase yield by investing in non-traditional asset classes, legacy systems struggle to keep up with the variation in holdings. Accounting, reporting, and data aggregation requirements are all affected by new asset class investments.
  2. Increased reporting requirements – The demand from regulators for information and transparency increases the need for reporting capabilities that are flexible and robust enough to satisfy requirements.
  3.     Performance attribution and risk analytics – Regulators want greater transparency from insurers. They also want reliable metrics that identify and explain the sources of performance and risk in portfolios. In turn, there is a greater demand for systems that provide performance attribution and risk analytics across a wider spectrum of instruments and currencies.
  4. The data explosion – Many firms find that large data infrastructures are increasingly difficult to maintain. Big data causes consolidation, aggregation, and storage challenges for today’s insurers.
  5. Cloud and mobile – Mobile devices are now used to retrieve portfolio data from the cloud in real time. However, many insurers are hesitant to provide this service; they’re worried about data breaches, identity theft, and cybersecurity issues. The challenge is to find the right combination of technology and safeguards to protect assets and information.
  6. Evolving operational models – As insurance firms look to cut costs and increase efficiency, they’re changing their operational models. Instead of trying to “bolt” functionality on to legacy systems, insurers are partnering with technology hosting and service providers to leverage innovative technologies and streamline processes.

For more information on how SS&C helps insurance companies navigate these operational challenges, read our white paper, “The changing landscape of insurance industry investing: Six key trends driving operational decisions”.

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