January 24, 2023

Survey Insights: Evolution and Opportunity in U.S. Insurers’ Investment Risk Management Practices

U.S. insurance companies are expected to increase their investment risk tolerance and grow portfolio allocations to private assets, according to a fall 2022 survey of U.S. insurance decision-makers commissioned by Conning. The survey also found that insurers are increasingly engaging with ESG principles. To learn more and access interactive graphics examining key data points, see below.

 

U.S. insurance companies are expected to increase their risk tolerance and grow portfolio allocations to private assets amid concerns of higher market volatility and inflation, according to a recent survey of U.S. insurance decision-makers commissioned by Conning (see Figure 1).

The Conning Risk Assessment Survey of U.S. Insurers collected responses from 303 insurance industry professionals in investment and operational roles including public, mutual, and private companies during the fall of 2022. The survey explored trends regarding investment risk and sustainability.

The findings overall suggest that risk management and sustainability continue to grow in both importance and complexity for insurers. And most acknowledge their firms face a learning curve and expect to invest in efforts to improve their risk-management capabilities.

Survey responses suggest insurers would not add risk blindly but would seek improved investment risk systems, opportunities to increase efficiency and reduce investment costs, and increase access to analytics and data to help them manage greater investment risk.

While current market conditions are generally the greater concern, insurers’ engagement with environmental, social and governance (ESG) issues increased in terms of their investment and operational decision-making. Respondents said they continue to generate greater ESG awareness beyond their firms as well, as they are increasing ESG expectations among partners. Most said they expect their firms will handle ESG compliance issues in-house and will likely dedicate resources to the effort.