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BLOG. 8 min read

Intelligent Automation’s Impact on Insurance Investment Operations

Insurance companies must align capital and liquidity from their investment activity with the ability to service and cover claims from policyholders. In light of today’s higher inflation and a higher interest rate environment, the paths to yield that insurance companies have relied upon in the recent past may be shifting yet again. While historically lower interest rates prompted many insurers to turn to alternative investments offering the potential for higher yield, higher short-term rates are causing the pendulum to swing back a bit to select fixed-income and mid-level credit opportunities.

Regardless of the allocation focus, one thing has become clearinsurance companies are looking for ways to improve profitability, and they have turned to process improvements to gain both flexibility and increased operational efficiency across all types of investments from traditional securities to alternatives and private credit.

As it pertains to alternative investments in particular, advanced technologies like intelligent automation (IA), we can bring a new level of scale and efficiency to the investment lifecyclefrom deal setup to document capture, event processing, accounting and reporting. IA can reduce the operational risks associated with alternative investments while simultaneously maximizing the incremental yield they may offer.

What Can IA Do for Insurance Investments?

Recent technological advancements, such as IA, can help insurance investment teams face the mounting challenges of tight timelines, talent shortages, ever-evolving regulatory requirements, and increasingly complex and diverse portfolios. These technologies can dramatically improve operational processes and deliver a significant return on investment (ROI). However, IA must be implemented correctly to achieve these benefits.

How can automation make insurance investments operate more efficiently?

IA combines business process management (BPM), artificial intelligence (AI) and robotic process automation (RPA) to solve specific repetitive tasks, operational bottlenecks and outdated, often manually intensive processes, enabling team members to refocus on higher-value functions. Essentially, IA aligns people and functions in the correct places to ensure everything operates intelligently.

How do Insurance Investment Teams Benefit from IA?

You can increase the timeliness and accuracy of investment data, improve customer service and achieve significant cost savings by automating repetitive, time-consuming tasks with IA. This allows for streamlined financial and regulatory reporting and faster accounting period closes. Alternative investments require the collection and processing of event notices that typically come as non-standardized documents from various external parties such as limited or general partners and custodians. Without IA, insurance investment teams must manually extract and enter these terms and notices into downstream reporting and accounting systems, increasing workloads and the likelihood of human data entry errors. Investment teams can lower operational expenses and minimize the risk of human error and potential rework by automating these paperwork-heavy, manual tasks.

Let’s explore some of the benefits IA can bring to insurance investment operation teams.

  • Position and cash reconciliations
    IA can identify and research positions or cash breaks. It automatically refreshes prices, stale security attributes or other market data points by re-computing expected values and then verifying them against counterparty information.
  • Collateral optimization
    IA can identify and optimize the holdings inventory available to be used as collateral, helping firms engage in funding activities like repurchase agreements.
  • Monthly checklists
    IA streamlines processes related to key review actions, auditing and signoffs, setting reminders to users of due or past-due dates, retrieving and assessing expected versus actual data, and reporting activities with appropriate and accurate audit trails.

More Use Cases for IA in Insurance Investment Operations

The global insurance industry is already aware of IA’s benefits in transforming claims management, improving insurance data and driving the customer experience forward, but there is interest in seeing IA cover other critical functions. There are many areas in insurance investments where IA can be adopted.

Data processing

IA can accurately process large amounts of data in real time. In insurance, this could involve populating investment data into systems from various sources such as client information, market feeds or regulatory filings, collecting data from disparate systems and collating it into one so the right people can access it. This ensures critical information stays secure and helps people make informed decisions faster. With IA, firms can:

  • Standardize data
  • Ensure consistency
  • Gain actionable insights
  • Inform investment decisions

Portfolio management

IA collects process data from various sources and provides valuable, real-time insights to facilitate better decision-making. IA can automate portfolio management tasks such as:

  • Analyzing investment opportunities
  • Monitoring market trends
  • Generating reports

Investment Governance

As crucial factors in investment management, compliance and risk require consistent and accurate regulatory reporting to ensure they adhere to financial regulations. IA can help organizations stay compliant by automatically collecting and analyzing risk-related data. IA can even be used to conduct periodic risk assessments and compliance audits. IA can be used for:

  • Validating data
  • Flagging investment risks
  • Monitoring transaction activities
  • Tracking risk thresholds
  • Generating risk assessment reports

Additionally, IA can help ensure compliance with regulatory requirements by reducing the amount of manual effort in reporting processes, which can be error-prone and data-heavy. With IA, you can automate:

  • Change monitoring
  • Regulatory reporting
  • Compliance reporting

Trade processing

IA can streamline trade processing activities while improving accuracy as teams execute investment trades. Insurers can automate a variety of areas by implementing a digital worker into trading processes, such as:

  • Trade confirmations
  • Reconciliations
  • Settlements

Break research and remediation

IA can automate reconciliation processes by working with new legacy systems, or even multiple systems and databases. This ensures reporting accuracy and reduces errors for matters such as:

  • Investment positions
  • Financial data
  • Comparing statements

IA can also help with document collection and processing in areas such as:

  • Bank loans: Principal paydown and rate reset notices.
  • Partnership investments: Capital calls, distribution notices, commitment letters, appraisals and valuation updates.
  • Mortgage loans: Deal terms and rate adjustments.

You can reduce manual errors, enhance reporting accuracy, improve efficiency and free up human resources for more complex and strategic tasks by deploying IA in insurance investment operations. However, you must have careful planning, integration with existing systems and ongoing monitoring to ensure successful implementation that aligns your automation with your evolving business needs.

Be the Best

Intelligent automation provides the best roadmap for the future. When IA is introduced, managed and orchestrated with a best practice approach it allows you to seize opportunities with streamlined workflows, a unified workforce and transformed end-to-end journeys.

If you can dream it, and there’s a good chance IA can do it. SS&C Blue Prism provides a robust, singular intelligent automation platform from which to launch all types of automation. With IA, insurance investment teams can make their investment processes smarter and more efficient, backed by reliable data and a team of tireless digital coworkers.

If you would like to learn more about the role of Robotic Process Automation in the insurance industry, and you are attending the Bermuda Risk Summit, March 13-15 in Hamilton, Bermuda don't miss our "Tradition vs Transformation: Embracing Insurtech Innovation" panel discussion. Our experts will be on hand to answer all of your questions.

You can read our "An Insurer’s Guide to Intelligent Automation" report, and explore the results of a survey we undertook to understand how insurance companies are adopting intelligent automation.

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