DATA & ANALYTICS

Rethinking the Risk Business:
Data and Analytics in the Insurance Industry

Featuring highlights of the ...
DATA & ANALYTICS

About the Research
A global survey of more than 400 asset managers and institutional asset owners on inv...
DATA & ANALYTICS

Five Drivers of Change in the Insurance Industry
Advanced data capabilities will be key to meeting many ...
DATA & ANALYTICS

Insurers are Investing Heavily to Keep Pace

% Change In Investment into Data and Analytics Over Past Th...
DATA & ANALYTICS

Investment is Targeted at Front-Office Execution and Decision-Making Tools

How Investment Will Be Prior...
DATA & ANALYTICS

Data and Analytics are Now a Firm Priority for Insurers…
Data is the Key to Addressing a Wide Range of S...
DATA & ANALYTICS

Yet the Industry is Polarized by Its Approach

Data is a competitive asset …

But few know how to use it...
DATA & ANALYTICS

Data Leaders are Better Prepared for the Challenges Ahead
Leaders
Data leaders are more confident in ......
DATA & ANALYTICS

Data Leaders Have Smarter Tools for Managing Risk, Compliance
and Performance
% that view area as a stre...
DATA & ANALYTICS

Defining a New Service Model

Data Readily Available

Adaptable Systems

Smarter Insights

Challenge

• ...
DATA & ANALYTICS

In Summary: Optimizing the Investment Engine

Get Smart on Risk

• The industry needs tightly-integrated...
DATA & ANALYTICS

This document is for marketing and/or informational purposes only, it does not take into account any inv...
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Rethinking the Risk Business: Data and Analytics in the Insurance Industry

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Featuring highlights of the State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit

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Rethinking the Risk Business: Data and Analytics in the Insurance Industry

  1. 1. DATA & ANALYTICS Rethinking the Risk Business: Data and Analytics in the Insurance Industry Featuring highlights of the State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit
  2. 2. DATA & ANALYTICS About the Research A global survey of more than 400 asset managers and institutional asset owners on investment data and analytics, conducted by the Economist Intelligence Unit on behalf of State Street (August and September 2013). More than 200 asset owners participated in the survey. Respondents by Region Respondents by Type 8% 20% 33% 8% 34% 16% 18% 33% North America Europe Asia Pacific 11%  Diversified Asset Managers  Traditional Asset Managers  Alternative Asset Managers Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit 19%  Banks  Insurers  Pension Funds  Other 2
  3. 3. DATA & ANALYTICS Five Drivers of Change in the Insurance Industry Advanced data capabilities will be key to meeting many of the industry’s most pressing challenges Strategic impact Data challenge More stringent risk Regulators are demanding greater management standards transparency Collect, extract, standardize and report on the right metrics and information Competitive pressure Insurers need to identify opportunities for performance improvements and enhancing investment returns Tools that enable better decisions on allocation and ability to execute rapidly on opportunities Regulatory complexity Massively increased reporting requirements imposing compliance costs and complexity on the business, and requiring changes to asset allocation Flexible platforms that enable data to be collected, transformed and reported on across multiple regulatory regimes; the need for closer alignment between capital management and investment approach Growing volume of trading data Proliferation of data across multiple platforms and systems Better integration and standardization of data, and multi-asset class trading platforms Better tools to drive investment performance New investment goals and tighter performance management Custom benchmarks that align performance metrics with insurance firms’ specific objectives 3
  4. 4. DATA & ANALYTICS Insurers are Investing Heavily to Keep Pace % Change In Investment into Data and Analytics Over Past Three Years (Insurer respondents only) Significantly increased our investment (>20%) 13% Slightly increased our investment (1-20%) 75% Made no change Slightly decreased our investment (1-20%) Significantly decreased our investment (>20%) 7% 3% 1% Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit 4
  5. 5. DATA & ANALYTICS Investment is Targeted at Front-Office Execution and Decision-Making Tools How Investment Will Be Prioritized Across a Range of Data Tools (Insurer respondents only) Order Management Systems / Execution Management Systems 49% • Order management tools are an investment priority Performance analytics 27% • Spend on data and analytics will continue to grow Portfolio optimization 28% • Need to move closer to realtime information Benchmark data 25% 34% Risk analytics 15% Significant increase Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit 51% 42% 43% 46% Slight increase 5
  6. 6. DATA & ANALYTICS Data and Analytics are Now a Firm Priority for Insurers… Data is the Key to Addressing a Wide Range of Strategic Concerns (Insurer respondents only) 18% • 82 percent of insurers view data and analytics as a high strategic priority • For 31 percent, data and analytics is the most important strategic priority 31% 0% 51% 0% It is the most important strategic priority It is a high strategic priority (near the top) It is a mid-level strategic priority It is a low-level strategic priority (near the bottom) It is not a strategic priority Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit 6
  7. 7. DATA & ANALYTICS Yet the Industry is Polarized by Its Approach Data is a competitive asset … But few know how to use it • 61 percent of insurers think data will be a key source of competitive advantage in the future • Only 21 percent of insurers are reaping the full benefits from their data and analytics capabilities today • 88 percent increased investment in data infrastructure in the past three years • Our research reveals that a capability gap is opening up between data leaders and data laggards An Industry Divided by Data 1. “Data Leaders” – Companies in the survey whose data and analytics are already a source of competitive advantage 2. “Data Laggards” – Have yet to gain full benefit from their data Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit 7
  8. 8. DATA & ANALYTICS Data Leaders are Better Prepared for the Challenges Ahead Leaders Data leaders are more confident in ... Laggards % confident in capability (All respondents) 70% • Generating forward-looking insights from data 43% 72% • Integrating risk and performance analytics 50% • Optimizing their electronic trading strategies 64% 53% By contrast, data laggards are … • More likely to get distracted by the complexity of data management X % agree with statement (All respondents) 7% 33% • Less likely to feel their data capabilities are keeping pace with the growth of their business Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit 92% 50% 8
  9. 9. DATA & ANALYTICS Data Leaders Have Smarter Tools for Managing Risk, Compliance and Performance % that view area as a strength (All respondents) Leader 81% Tools for regulatory compliance Laggard 63% Leader 60% Multi-asset class risk tools Laggard 38% Leader 70% Custom benchmarks/indices Laggard Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit 59% 9
  10. 10. DATA & ANALYTICS Defining a New Service Model Data Readily Available Adaptable Systems Smarter Insights Challenge • Timeliness of data is the top data challenge for insurers (cited by 37 percent) • Systems must adapt to support multiple geographies, asset classes and regulatory regimes • Only 13 percent of insurers have all of the talent they need to manage data effectively Solution • More advanced decisionsupport tools that are better integrated with enterprise databases • Systems that support global reporting • New outsourcing models focused on insight as well as cost • Integrated view on risk and performance Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit 10
  11. 11. DATA & ANALYTICS In Summary: Optimizing the Investment Engine Get Smart on Risk • The industry needs tightly-integrated solutions to manage today’s multiasset portfolios Manage Regulation • Develop reporting systems with the flexibility to meet evolving regulatory demands across multiple jurisdictions Integrate Your Data • Insurance firms need to invest in enterprise data warehouses and better data governance Accelerate Investment Decisions • Better, more accurate and timely data is key to making better investment decisions and being able to act on these insights in real time Future-Proof Your Systems • Insurance firms need flexible systems that can adapt as investment goals and strategies evolve 11
  12. 12. DATA & ANALYTICS This document is for marketing and/or informational purposes only, it does not take into account any investor's particular investment objectives, strategies or tax and legal status, nor does it purport to be comprehensive or intended to replace the exercise of a clients own careful independent review regarding any corresponding investment decision or review of our products and services prior to making any decision regarding their utilization. This does not constitute investment, legal, or tax advice and is not a solicitation to for products or services or intended to constitute any binding contractual arrangement or commitment by State Street and/or any subsidiary referenced herein to provide securities services. State Street hereby disclaims all liability, whether arising in contract, tort or otherwise, for any losses, liabilities, damages, expenses or costs arising, either direct or consequential, from or in connection with the use of this document and/or the information herein. This document contains certain statements that may be deemed forward-looking statements, which are based on certain assumptions and analyses made in light of experience and perception of historical trends, current conditions, expected future developments and other factors believed appropriate in the circumstances. © 2014 State Street Corporation CORP-0925 12
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