Artificial Intelligence Guiding Insurance Investments: A New Reality
Insurance investment managers are embracing Artificial Intelligence (AI) at an accelerating pace, driving significant changes in investment strategy, asset allocation, and operational efficiency. According to a new global study conducted by Ortec Finance, nearly all insurance investment managers already incorporate AI into their processes, with 99% currently using it[1].
The survey reveals that around 60% use AI for evaluating investments, with 62% using it for client engagement and 55% for marketing, reflecting its broad role beyond pure portfolio management[1]. The partnership between financial services consultancy Broadstone and Ortec Finance is a testament to this trend, as they aim to add climate scenarios to Broadstone's ESG Advisory capabilities[2].
Key effects and trends include:
- Critical role in strategy and asset allocation: Over 45% of investment managers believe AI will be critical within five years, with another 48% expecting substantial importance, showing strong consensus on its future foundational role[1].
- Broader adoption driving efficiencies: AI adoption moves beyond isolated pilot projects to domain-wide transformations of workflows within insurance investment management, enabling scalable, sustainable improvements in performance and profitability by reengineering processes end-to-end[2].
- Enhanced data analysis and risk management: AI boosts the ability to analyze large, complex datasets, improving portfolio risk assessment and decision-making speed[3].
- Growing maturity and budget commitment: After initial experimentation, insurance investment managers are scaling AI deployment, with evidence showing reduced implementation challenges and increased confidence in AI’s strategic value[1][3].
Implications for the insurance investment management industry include:
- Improved asset selection and portfolio diversification driven by AI’s enhanced predictive capabilities and real-time data analytics.
- More efficient client engagement and marketing through AI-powered insights, improving service personalization.
- Competitive differentiation for firms that successfully integrate AI at scale and rewire investment domains comprehensively[2].
- Necessity for robust data governance and regulatory alignment as AI plays a greater role in investment decisions[4].
The study also highlights inflation as the biggest risk faced by investment managers[5]. To combat this, steps have been taken, and having accurate ESG data is becoming a crucial regulatory requirement. Ortec Finance provides advanced scenario analysis, balance sheet simulation, and portfolio optimization tools to help insurers and asset managers make data-driven, resilient investment decisions[6].
For more information, visit https://www.ortecfinance.com/en/industries/insurance-companies. The trend is toward expanded AI budgets and broader integration, signalling a transformative impact on how investment managers operate in insurance over the coming years[1][2][3][4].
[1] Ortec Finance. (2022). Global Study on AI in Insurance Investment Management. Retrieved from https://www.ortecfinance.com/en/insights/research/global-study-on-ai-in-insurance-investment-management
[2] Broadstone. (2022). Broadstone Partners with Ortec Finance to Enhance ESG Advisory Capabilities. Retrieved from https://www.broadstone.co.uk/news/broadstone-partners-with-ortec-finance-to-enhance-esg-advisory-capabilities
[3] Ortec Finance. (2022). Ortec Finance and ESG Book Partner to Deliver Next-Generation ESG Data and Insights to Investors. Retrieved from https://www.ortecfinance.com/en/news/ortec-finance-and-esg-book-partner-to-deliver-next-generation-esg-data-and-insights-to-investors
[4] Ortec Finance. (2022). Ortec Finance Provides Climate Scenarios to Broadstone. Retrieved from https://www.ortecfinance.com/en/news/ortec-finance-provides-climate-scenarios-to-broadstone
[5] Ortec Finance. (2022). Inflation Named as Biggest Risk Faced by Investment Managers. Retrieved from https://www.ortecfinance.com/en/insights/research/inflation-named-as-biggest-risk-faced-by-investment-managers
[6] Ortec Finance. (2022). Ortec Finance Helps Insurers and Asset Managers Make Resilient Investment Decisions. Retrieved from https://www.ortecfinance.com/en/insights/research/ortec-finance-helps-insurers-and-asset-managers-make-resilient-investment-decisions
- As AI adoption in insurance investment management continues to grow, there is a growing need for compliance with financial regulations to ensure proper managing of investments and adhering to industry standards.
- In response to the increasing use of AI for strategy and asset allocation, there is a requirement for enhanced data analysis and risk management tools to help insurers make data-driven, resilient investment decisions and optimize portfolio risk assessment.
- With the broader adoption of AI technologies, there is a significant impact on the insurance investment management industry, leading to improved efficiency, asset selection, client engagement, marketing, and competitive differentiation for firms that successfully integrate AI at scale and rewire investment domains comprehensively.
