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Blog | Jan 30, 2024

Intelligent Automation’s Impact on Insurance Investment Operations

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Insurance companies tend to be more conservative investors; they must align capital and liquidity from their investment activities with the ability to service and cover claims from policyholders. However, the more traditional, conservative paths to yield might not be as effective – especially in today’s higher inflation, and higher interest rate environment. As such, many insurance companies are turning to alternative investments with the potential to offer incremental yield. If these are not managed efficiently from an operational standpoint, they can carry added risk and cost. And that can quickly erode potential incremental returns.

Intelligent automation (IA) offers the ability to bring a new level of scale and efficiency to alternative investment activities. It ensures insurance companies can maximize incremental yield while simultaneously reducing the operational, accounting and reporting risks associated with these types of investments.

How Does IA Work for Insurance Investments?

Insurance investment teams today face mounting challenges: talent shortages, tight timelines, increasingly complex and diverse portfolios, and ever-evolving regulatory requirements. Recent advancements in technology, particularly in IA, can help address these challenges. And that can dramatically improve operational processes and deliver a significant return on investment (ROI). That said, IA must be implemented correctly.

How can automation make insurance investment operations more efficient?

IA combines robotic process automation (RPA), business process management (BPM) and artificial intelligence (AI) to solve specific operational bottlenecks, repetitive tasks and outdated, often manually-intensive processes. This allows team members to refocus on more valuable functions. In other words, IA puts people and functions in the right places to ensure everything operates intelligently.

What Are the Benefits of IA for Insurance Investment Teams?

When you automate repetitive, time-consuming tasks with IA, you can achieve significant cost savings, improve customer service and increase the timeliness and accuracy of investment data. This paves the way for faster accounting period closes and streamlined financial and regulatory reporting. Alternative investments come with unique deal terms; they require the collection and processing of event notices that typically come as non-standardized documents. These documents tend to be from various external parties such as limited or general partners and custodians. Without IA, these terms and notices need to be manually extracted and entered into downstream accounting and reporting systems by insurance investment teams. This can increase workloads and the likelihood of human data entry errors. By automating these paperwork-heavy, manual tasks, insurance investment teams can lower operational expenses and minimize the risk of human error and potential rework.

Let’s look at some of IA’s benefits for insurance investment operation teams.

Break remediation

    IA can identify and research positions or cash breaks. It automatically refreshes stale security attributes, prices or other market data elements. It does this by recomputing expected values and then verifying these against counterparty information.

    Collateral optimization

    IA can identify and optimize the holdings inventory available to be used as collateral. It helps firms engage in funding activities, such as repurchase agreements.

    Monthly checklists

    IA streamlines processes related to auditing and signoffs; key review actions; retrieving and assessing expected versus actual data; setting reminders to users of due or past-due dates; and reporting activities with appropriate and accurate audit trails.

    Additional IA Use Cases in Insurance Investment Operations

    The global insurance industry is already aware of IA’s benefits in improving insurance data, transforming claims management and driving customer experience forward. Yet many want to see IA utilized further to cover other critical functions. Below are some of the many areas in insurance investments where IA can be adopted.  

    Data processing

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

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

    Portfolio management

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

    • Monitoring market trends
    • Analyzing investment opportunities
    • Generating reports

    Investment Governance

    Compliance and risk management are crucial factors in investment management, requiring consistent and accurate regulatory reporting to ensure they adhere to financial regulations. IA can automatically collect and analyze risk-related data to help organizations stay compliant. It can even conduct periodic compliance audits and risk assessments. IA can be used for:

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

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

    • Regulatory reporting
    • Change monitoring
    • Compliance reporting

    Trade processing

    IA can streamline trade processing activities while also improving accuracy as teams execute investment trades. By implementing a digital worker into trading processes, insurers can automate, in some examples:

    • Trade confirmations
    • Settlements
    • Reconciliations

    Break Research and Remediation

    IA can work in new or legacy systems to automate reconciliation processes – and it works between different systems and databases. This will reduce errors and ensure reporting accuracy for matters such as:

    • Financial data
    • Investment positions
    • Comparing statements

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

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

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

    Be the Best

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

    You 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 automations. 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.

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