How 56% of insurers plan to boost data analytics use

Strengthening scenarios and stress testing contributed to the rise of ALM expenditures.

Nearly one in 10 Asia-Pacific (APAC) insurers said it is challenging for their asset liability management (ALM) systems to manage changes in asset allocation and new data sources, new research showed.

The Clearwater Analytics (CWAN) research also said nearly a fifth of APAC insurers said their ALM systems can swiftly cope with diversification and new instruments.

“Insurers recognise that modern ALM requires speed, precision, and integration that legacy systems simply can’t deliver anymore. The risks of not investing and improving ALM systems are manifold, and APAC insurers rightly appreciate the importance of keeping up with regulations,”  Shane Akeroyd, Chief Strategy Officer and President of Asia Pacific at CWAN, said in the report.

The study surveyed insurance asset management executives at firms, with total assets under management of $3.82t, across Hong Kong, Singapore and Australia.

Also, the main drivers of increased technology spending on asset liability management, insurers point to regulatory demands, including heightened requirements for stress testing, solvency reporting, and risk disclosures.

“The shift towards illiquid, esoteric, or alternative asset classes that require more sophisticated risk models was ranked second,” the report stated.

“In third place was the need to incorporate advances in computing, such as cloud scalability, sophisticated modelling, and AI, for more actionable insights on risk and capital efficiency,” it added.

Lastly, APAC insurers said factors that contribute to the rise of ALM expenditures were strengthening scenarios, stress testing, correlation, and other calculations across asset classes.

In terms of prioritisation for technology in the next 12 months, over half (56%) of insurers stated they will increase the use of data analytics, whilst 55% will integrate artificial intelligence and machine learning technology.

Other priorities include: improving the customer experience (54%), improving portfolio management systems (51%), implementing or expanding cloud technology (41%), and considering greater automation of reporting (31%).