Perception A: Insurers need strategies to manage increasing investment complexity
Insurers are working hard to tackle increasing investment complexity with a greater focus on strategies to address a growing range of challenges, a new global study among investment management professionals in Life Insurers, London Markets (re)insurers and investment managers who support insurers, shows.
More than four out of five (84%) believe the level of investment complexity and challenges the industry faces will increase over the next two years, according to the report from Ortec Finance, the leading global provider of risk and return management solutions for insurers and other financial services companies.
Those concerns are driving increased spending on scenario modelling, optimisation and testing across the sector as a whole with 86% surveyed predicting a rise over the next three years, research found.
Key issues highlighted in the report include changing attitudes to risk and changes in asset allocations as well as the emergence of new challenges such as ESG and greenwashing while firms continue to grapple with inflation worries.
Over the next 12 months, 59% questioned believe the risk profile of their funds will rise with just 39% believing it will fall. Increasingly they are switching to alternative assets - 89% of those surveyed expect a rise in allocations to alternative assets in the next 12 months as investment choice expands.
They are planning to increase allocations to green bonds and specialist climate focused funds but are concerned that the range of investments insurers can access will shrink over the next two years due to increasingly stringent ESG requirements. Almost all (98%) are concerned about the current level of greenwashing when it comes to investing, the study found.