Half of US insurers say regulations affect investment decisions

Channels: SAA/ALM, Regulation

Companies: Clearwater Analytics

People: Richard Pullara, Tyler Haws

The low interest rate environment and continuously changing market and regulatory conditions are keeping investment teams on their toes, according to US company Clearwater Analytics in a survey conducted with investment and accounting professionals in the insurance industry.

The Clearwater survey, 2014 Insurance Investment Benchmark Survey for Treasury and Accounting Professionals, involved more than 400 participants at insurers with investment portfolios of varying sizes up to $20bn.

"The report reveals how treasury and accounting professionals at insurers across the US view the current investment and regulatory environment, rate the efficiency of their accounting operations, and evaluate portfolio performance, risk, and investment policy compliance," insurance manager Richard Pullara of Clearwater Analytics said.

The question "What are your biggest investment-related concerns?" triggered a large number of responses. Three of these were that the unpredictable investment and regulatory environment is driving investment strategies for many insurance organisations, that performance analysis and investment reporting remains a key practice, despite operational challenges and finally that risk analytics and investment policy compliance monitoring techniques vary, despite the importance that organisations place upon these practices.

Looking at investment strategies, the survey found 24% of respondents with bank loans in their portfolios and another 9% were considering them, whereas five or six years ago they were not at all common investments for insurers. Turning to the regulatory environment, nearly half (47%) responded that new regulations were having some impact, and a quarter responded that they were having a high impact or extremely high impact on their decisions.

Addressing risk analytics and investment policy compliance monitoring, the Clearwater survey showed 47% of respondents use external asset managers to track and monitor exposures on their behalf, while 27% indicated they rely on their investment accounting provider. A smaller set (14%) indicated that they track risk by relying on a data provider, or depend on third-party risk software.

Summing up the results, Tyler Haws, director of business development at Clearwater Analytics, commented: "The survey confirmed that, more than ever before, investment and accounting professionals need access to accurate investment information more frequently. Time must be spent analysing data, not manually entering or processing it. With this insightful data, insurers can benchmark themselves against their peers, and also decide how these results may impact their strategy moving into 2015 to free themselves from the menial and move to the meaningful."