SS&C Technologies Insurance survey: use of cloud; co-sourcing
The survey of 100 insurance executives from around the world, conducted in the second quarter of 2015, identified the following trends amongst large insurance firms:
· A shift away from internally-developed investment-related systems to commercially-developed software, cloud technology and co-sourcing providers
· Agreement that the biggest operational challenge to future expansion is an ability to process more complex security types
· Consensus that access to skilled staff is critical in deciding on the optimum business model
"The survey findings underline a strong trend in the insurance market of companies moving away from internally developed and administered systems to consideration of hosted solutions, component co-sourcing and full SaaS offerings," said Dave Reid, Senior Vice President, Institutional Global Outsourcing, SS&C Technologies.
While the survey found that companies of all sizes are looking to move away from internally developed systems, the data also showed the size of the organization is a significant factor when deciding to outsource. Smaller companies with less than \\$10bn AUM tend to be early adopters of outsourcing. Larger insurers with more than \\$10bn AUM leverage outside software and cloud solutions, but are slower to adopt a full outsourcing model. The largest insurers with more than \\$50bn AUM expect to increase the use of both third party vendors and co-sourcing arrangements to support their middle and back office functions.
Overall, some 80% of survey participants identified their cloud strategy to be a critical strategic concern, but only half of these respondents indicated that their internal technology operations and infrastructure teams were well suited to meeting future needs over the next 2-5 years.
When asked about the areas that were causing most difficulty with regard to their expansion strategy, the top concern was the ability to process new security types. This may be compounded by the fact that nearly 60% of survey respondents do not have all of their assets on one comprehensive investment accounting system - increasing operational risk, causing data issues, hindering transparent reporting and potentially impacting investment decision making.
"When choosing a business model insurers need to take a critical look at their operations and ask whether they have the deep subject matter expertise and hands-on experience needed to develop, implement and maintain an investment-related system that will grow in line with future requirements while satisfying all compliance and regulatory demands," said Timothy Reilly, Senior Vice President, Institutional & Investment Management, SS&C Technologies.
SS&C surveyed 100 insurance executives from around the world during the second quarter of 2015 and gathered opinions from respondents within life & health insurance, property & casualty, multi-line insurance, reinsurance and asset management firms. More than 30% of the respondents came from firms with over \\$50bn in assets under management (AUM), with a further 55% having AUM over \\$10bn. A copy of the full survey results, including a more detailed breakdown of the respondents, is available here.