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Insurance firms to increase tech spend over next 12 months, says SS&C survey

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Almost half of insurance company investment managers (44 per cent) are increasing technology spend over the next 12 months, according to a new survey by SS&C Technologies.

The firm’s 2018 Insurance Asset Management Technology Outlook reveals that only four per cent of respondents cited a decrease in technology spend over the next year, making it clear that technology continues to play an important role in investment operations.
 
As more firms turn to technology to help with daily operations, cybersecurity risks were cited as the top concern (37 per cent), followed by operational risk (22 per cent) and regulatory risk (15 per cent).
 
Insurance asset managers are seeking to boost portfolio allocations in private equity, hedge funds and other partnership investments (36 per cent), while also looking to diversify by investing in alternatives (22 per cent) and commercial loans (16 per cent).
 
A majority of respondents (75 per cent) are staying at current levels as it relates to outsourcing investment operations functions, with 20 per cent reporting an increase in outsourcing over the next year. Additionally, about a third of respondents (29 per cent), plan on increased use of external investment management.
 
Almost half of respondents (41 per cent) found the biggest operational challenge to expansion to be local regulations and accounting standards, followed by lack of knowledge and talent (28 per cent) and processing new security types (21 per cent).
 
“As more insurance companies seek to diversify their portfolio allocations across asset classes, it highlights the need to have a single platform in place that’s capable of accounting for and reporting on a broad range of investments,” says Christy Bremner (pictured), Senior Vice President, SS&C Institutional and Investment Management. “This directly correlates with the uptick in technology spend we’re seeing from firms as they look to streamline operations and have a holistic view of their data plus risk factors within each portfolio.”
 
The survey was conducted in Q2 2018 among a global audience of 128 insurance asset management professionals at a gathering hosted by the Insurance Accounting & Systems Association (IASA). Participants were asked to respond to seven questions on current challenges, concerns, and the future direction of their investment management operations.

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