As the insurance industry faces an unprecedented shift in how it does business, a key consideration the industry needs to address is how best to leverage its investment in technology, according to the most recent survey of insurance leaders released today by State Street Corporation (NYSE:STT). Specifically, insurers are looking to better utilize data and analytics to make better investment and risk management decisions.
State Street’s study, based on a survey of more than 300 insurance executives globally conducted by the Economist Intelligence Unit, focused on the major industry issues and examined how prepared insurers are to face those challenges. The study, “Facing the Future: Blueprint for Growth,” showed that insurers are hungry for better ways to collaborate and share data across their business:
- Seventy-five percent of respondents say that using data more effectively across their organization is a challenge for them, with 22% citing it as a “major challenge.”
- Looking specifically at the investment portfolio, while 84% of respondents say they have access to portfolio investment data that is accurate, only two-thirds believe they have access to data that allow them to understand their total risk exposure.
- Thirty-seven percent of respondents say they are evaluating a large-scale investment in IT systems within the next 12 months.
“Like many large, global institutions, insurers are starting to shift their technology focus from big data to smart data,” said Joseph C. Antonellis, vice chairman of State Street. “The nature of what insurers do provides a wealth of data, but it is clearly a struggle to harness that data to capture meaningful, actionable insights.”
In addition to leveraging data through analytics to better understand and help customers, insurers are looking to technology to address other challenges. A difficult market backdrop with a historically low interest rate environment, future investment cash flows and match them to future liabilities, while also helping to ensure compliance with new regulations and reporting requirements. In addition, State Street’s performance, analytics and compliance products offer solutions to analyze performance and risk in investment portfolios.