Six Signs Your Insurance Investment Accounting and Analytics Operating Model Needs a Transformation

Sixty percent of insurance asset managers plan to increase their risk exposures over the next two years. This increase is less of a preference and more of a necessity as low interest rates and the underperforming bond market continue to reduce margins and force insurers to consider investments in higher yielding asset classes (including numerous private and alternative asset classes) in search of income.

Compounding this increase in risk appetite (and increasing reliance on complex asset types), is a push towards ESG, particularly with a focus on sustainable investing. The combination of expanded asset classes and increased sustainability requirements come with high volumes of disparate data and increased operational complexity, putting added strain on already fragile operating models.

If you are an insurer whose investment mandate continues to grow in complexity, you too may be feeling the strain within your organization and could be ripe for an operations transformation.

If you are not sure if an operating model overhaul is the right path forward, perhaps you need a sign. Below are six common signs that it’s time to modernize your investment accounting and analytics operating model.

Your investment accounting system is from the 1900s

Many insurance assets are accounted for on a small number of legacy applications that date back over 30 years. Some of these applications have a direct replacement under development, while others are simply no longer being supported/or invested in. Regardless of which situation your investment accounting solution falls in, it’s better to proactively assess the options in the marketplace, rather than have your hand forced by your existing vendor.

Your technology is still on premise

Business is moving to the cloud. Although the asset management industry is traditionally slow to adopt new technology, they too are on the move to the cloud, and applications supporting the insurance space are no exception. The industry-leading insurance investment accounting and analytics providers are either offering hosted (cloud) solutions or introducing new cloud-native applications into the market. In addition to the systems vendors, the capabilities of the outsourcing service providers have matured to the point that there are several viable options for full insurance investment accounting and analytics outsourcing.

You operate on multiple investment accounting systems

Regardless of how your firm ended up with multiple investment accounting systems (to support different accounting basis, different asset classes, different product types, institutional vs insurance client bases), if you have multiple systems performing investment accounting functions, it is a signal to assess a possible rationalization to a more comprehensive, modern solution.

Manual workarounds are the norm

If your operating workflow includes a high number of data entry/transformation tasks, either in the investment accounting system(s), in Microsoft Excel, and/or into the Corporate G/L, your operating environment may hold more risk than your portfolio. The combination of operational risk and inefficiency in a manual environment should provide the impetus to at least consider a transition to a new operating platform.

Gaining a holistic view of your portfolio is elusive

If calculating risk measures or exposures for your portfolio is an extensive data collection effort, rather than a quick sort on a dashboard, the disparate systems and manual processes inherent in your environment may have reared their ugly heads once again. Or perhaps it’s an immature data management capability that is preventing an easy view of key measures within your portfolio. Either way, it may be time to assess the operating, technology, and data environment supporting your business, and determine if it’s time to take advantage of the continually improving options in the marketplace.

Regulatory reporting sure seems harder than it used to

If you feel the alphabet soup (GAAP, STAT, Tax, IFRS) of local and global reporting requirements seems harder than ever to keep up with, you are not alone. It may simply be another sign that your operating model hasn’t kept up with the expansion of your business, or the evolving regulatory landscape.

If any of the signs mentioned above are present in your organization, it may be time to consider a change. Rather than navigate the countless operating model and vendor options alone, you may want to partner with an experienced guide. Citisoft has assisted numerous insurance asset managers on this journey and would love to accompany you on the road to a simplified, streamlined, and modernized operating model.