In July, TEK2day published the"Spotlight: The Evolving Insurance Industry" reportsponsored by SS&C, focusing on the catalysts of change within the global insurance industry. The report explores how M&A activity and low-interest rates, product and process innovation, and digital transformation and advanced automation are the leading drivers for industry trends.
M&A activity and low yields
While many in the industry have suspected that low yields have been behind much of the M&A activity recently, there has been limited data to prove that assumption. This report shows the data behind private equity’s $1 trillion of “dry powder” at the end of 2020, as well as how low-interest rates have bolstered public company valuations. Additionally, very low-interest rates have prompted insurance companies to seek out yield through high-yield bonds, private equity and alternative assets, and fixed annuities. These trends have been behind the increased interest in technology and insurance company investments.
Product and process automation
Diversification of investment portfolios, the search for higher yield, and the need to enhance the user experience of consumer-facing revenue streams have motivated insurers to focus more attention on innovation. This has led to an increase in asset managers acquiring insurance and reinsurance companies. In turn, this has led to premium growth across major reinsurers.
Digital transformation and advanced automation
Digital transformation in the insurance and financial services industries typically refers to the full technology stack. This means everything from the server level (such as cloud technology), to data and analytics, to software applications and other user-facing technologies. These areas utilize artificial intelligence (AI), and other next-generation technologies like machine learning (ML), natural language processing (NLP), robotic process automation (RPA), predictive analytics and more.
Horizontal technologies are those that can be deployed within a variety of industries, while vertical technologies are focused on a particular industry vertical. Within the insurance vertical, SS&C’s Singularity is an AI-powered investment accounting platform that can be fully outsourced, co-sourced or self-service. Singularity uses ML, NLP, RPA and related automation technologies, and can be complemented by other SS&C products and services.