The latest analysis of the European insurance industry by Cerulli Associates has found that small and mid sized groups are increasingly seeking solutions from key manager partnerships, driven by factors such as the need to find capital efficiency under Solvency II.
Other top priorities include access to information on risk and capital consumption in portfolios and tailoring products to reduce capital charges.
Over half, 56%, of the asset managers surveyed for the responses said that developing capital efficient products specifically for insurers is a high priority for their own business.
Also according to Cerulli Associates’ report European Insurance Industry 2018: Embracing the New Normal, insurers in the region have been so preoccupied with Solvency II implementation that they have failed to investigate new asset classes “as thoroughly as they would have liked”.
“Those that have adapted to their new regulatory burden may now have the internal bandwidth to be more proactive in their investment decision-making. As a consequence, the range of strategies on which insurers now request dedicated solutions is expanding. Many insurers now expect reporting add-ons, such as Pillar III tripartite templates, as standard and will often omit managers that fail to offer these functions from shortlists,” the report suggests.
Justina Deveikyte, associate director of European institutional research at Cerulli, said that asset managers looking to do business with insurers should develop awareness of solvency capital requirements and apply this to as broad a range of products as possible. Those able to optimise product this way and provide risk control, reporting and overlays likely “will have a strong competitive advantage”.
Many of the larger asset managers surveyed for the report have dedicated personnel working with insurer clients, while the majority of those surveyed said they planned to increase their insurance teams over the next 1-2 years by hiring specialists.