GLOBAL INSURANCE REPORT 2020
Insurers see the future
360 senior insurance executives across the globe share their insights into how the pandemic is fundamentally reshaping the industry and their investment approach. Our interactive report charts key themes and global and regional implications.
A fundamental reshaping of the insurance industry in four themes
The pandemic has put an additional layer of pressure on an industry already in flux and accelerated existing trends. The near future will require significant management decisions on how to reinvent business models and where to invest centered on four key themes.
Source: BlackRock Global Insurance Survey, June-July 2020. Base: Global (n = 360).
We visualize each theme and its global and regional implications in our interactive report, complemented by comments from your peers and BlackRock experts.
01 Embracing digital transformation
69% of insurers plan to prioritize technology investment in response to a permanently changed environment. Technology offers the prospect of getting closer to the customer through digitally enabled policyholder engagement and distribution platforms.
62% cite risk management concerns as a significant challenge for their investment teams in the work from home environment and technological resilience is a major focus.
Technological change and a more flexible and tech-enabled workforce open up new possibilities to create value across the business from operations through to digital distribution.
Technology is enabling the industry to change
Q: Do you foresee any permanent changes in investment team operations, technology platforms or working patterns following the post-COVID normalisation?
Source: BlackRock Global Insurance Survey, June-July 2020. Base: Global (n = 360).
The respondents selected their top three answers.
02 Reinventing business models for a post-COVID world
More than 60% envisage a more flexible, targeted product offering with closer policyholder engagement in an environment of low rates and significant pressure on policyholders following the pandemic.
Improved coordination between product and investment teams is essential as insurers redesign the end-to-end process of their product offering and offer new forms of coverage. Specialized pandemic risk coverage and life insurance with an investment focus are priorities for life and multiline insurers.
Insurers would like to see changes to capital treatment and accounting rules post the crisis to ensure better alignment with underlying risk and long-term holdings respectively.
Revisiting product priorities
Q: To respond to your customers’ evolving needs, which of the following products and services would you prioritize in the next 2 years?
Source: BlackRock Global Insurance Survey, June-July 2020. Base: Life and Multiline insurers only (n=175). The respondents selected their top three answers.
03 Enhancing portfolio flexibility to promote resilience
Circa 60% look to combine a focus on quality with higher diversification, and increased portfolio flexibility with strong governance.
Risk appetite is remarkably robust with 47% wanting to increase risk exposure. Insurers view geopolitical risk and weak global economic growth as the most serious macro risks, while asset price volatility and liquidity risk are considered to be the major market risks.
Strengthening credit quality and diversification have been the biggest adjustments to investment strategies following the crisis. Insurers intend to increase cash holdings at the expense of public market allocations, but target exposures to multi-alternatives and select private market investments. They have to balance these exposures with liquidity concerns and a desire for greater resilience.
Repositioning for prolonged low rates
Q: What steps have you taken in the past 12 months to position for a prolonged period of low interest rates?
Source: BlackRock Global Insurance Survey, June-July 2020. Base: Global (n = 360).
The respondents selected their top three answers.
04 Prioritizing sustainability objectives
78% believe the COVID experience is accelerating their focus on ESG, with a greater emphasis on social and governance aspects. Insurers increasingly invest in specific ESG strategies and consider ESG risk to be a key factor when assessing new investment opportunities.
When our Global Insurance Survey uncovered ESG a central theme in 2018, many companies were still struggling with the concepts and what that meant for them. Today, the global industry and chiefly its most advanced companies are leading a charge that is transforming the ways in which to invest and manage risk. ESG considerations are penetrating investment decisions deeply.
Putting ESG into action
Q: Thinking about ESG, have you done any of the following?
Source: BlackRock Global Insurance Survey, June-July 2020. Base: Global (n = 360).
Discover the Global Insurance Report 2020
Global insurers share their views on how 2020 is reshaping the industry and their investment approach through digital transformation, redesigned business models, portfolio flexibility for great resilience and the prioritization of sustainability.
Capital at risk
Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.
Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time.
This material is provided for educational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are subject to change. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be and should not be interpreted as recommendations. Reliance upon information in this material is at the sole risk and discretion of the reader. The material was prepared without regard to specific objectives, financial situation or needs of any investor.
Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy. This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer.
This material may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections, forecasts, and estimates of yields or returns. No representation is made that any performance presented will be achieved by any BlackRock funds, or that every assumption made in achieving, calculating or presenting either the forward-looking information or any historical performance information herein has been considered or stated in preparing this material. Any changes to assumptions that may have been made in preparing this material could have a material impact on the investment returns that are presented herein. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by BlackRock to be reliable, are not necessarily all inclusive and are not guaranteed as to accuracy. Unless otherwise stated, all information is as at end of August 2020.
The report summarizes the results of a survey of senior representatives of global insurance companies by an external agency on behalf of BlackRock, complemented with a series of online and telephone interviews. The gathered data and opinions provided by specific insurers are indicative in nature only and do not represent a scientific or exhaustive study of the state of the insurance industry and insurers’ asset allocation and investment intentions. Data sets may be incomplete or inconclusive and third-party opinions should not be construed as forecasts or indicative of any future intention . BlackRock does not endorse or necessarily agree with the third-party opinions expressed in this report. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy.
Important information
This material is for distribution to Professional Clients (as defined by the Financial Conduct Authority or MiFID Rules) and qualified investors only and should not be relied upon by any other persons.
In Latin America
For institutional investors and financial intermediaries only (not for public distribution). This material is for educational purposes only and does not constitute investment advice or an offer or solicitation to sell or a solicitation of an offer to buy any shares of any fund or security and it is your responsibility to inform yourself of, and to observe, all applicable laws and regulations of your relevant jurisdiction. If any funds are mentioned or inferred in this material, such funds may not been registered with the securities regulators of Argentina, Brazil, Chile, Colombia, Mexico, Panama, Peru, Uruguay or any other securities regulator in any Latin American country and thus, may not be publicly offered in any such countries. The securities regulators of any country within Latin America have not confirmed the accuracy of any information contained herein. No information discussed herein can be provided to the general public in Latin America. The contents of this material are strictly confidential and must not be passed to any third party.
In Mexico, FOR INSTITUTIONAL AND QUALIFIED INVESTORS USE ONLY. INVESTING INVOLVES RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THIS MATERIAL IS PROVIDED FOR EDUCATIONAL AND INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER OR SOLICITATION TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SHARES OF ANY FUND OR SECURITY. This information does not consider the investment objectives, risk tolerance or the financial circumstances of any specific investor. This information does not replace the obligation of financial advisor to apply his/her best judgment in making investment decisions or investment recommendations. It is your responsibility to inform yourself of, and to observe, all applicable laws and regulations of Mexico. If any funds, securities or investment strategies are mentioned or inferred in this material, such funds, securities or strategies have not been registered with the Mexican National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores, the “CNBV”) and thus, may not be publicly offered in Mexico. The CNBV has not confirmed the accuracy of any information contained herein. The provision of investment management and investment advisory services (“Investment Services”) is a regulated activity in Mexico, subject to strict rules, and performed under the supervision of the CNBV. The materials that may be shared in this forum are for information purposes only, do not constitute investment advice, and are being shared in the understanding that the addressee is an Institutional or Qualified investor as defined under Mexican Law. BlackRock México Operadora, S.A. de C.V., Sociedad Operadora de Fondos de Inversión (“BlackRock México Operadora”) is a Mexican subsidiary of BlackRock, Inc., authorized by the CNBV as a Mutual Fund Manager (Operadora de Fondos), and as such, authorized to manage Mexican mutual funds, ETFs and provide Investment Advisory Services. For more information on the Investment Services offered by BlackRock Mexico, please review our Investment Services Guide available in www.blackrock.com/mx . This material represents an assessment at a specific time and its information should not be relied upon by the you as research or investment advice regarding the funds, any security or investment strategy in particular. Reliance upon information in this material is at your sole discretion. BlackRock México is not authorized to receive deposits, carry out intermediation activities, or act as a broker dealer, or bank in Mexico. For more information on BlackRock México, please visit:www.BlackRock.com/mx. BlackRock receives revenue in the form of advisory fees for our advisory services and management fees for our mutual funds, exchange traded funds and collective investment trusts. Any modification, change, distribution or inadequate use of information of this document is not responsibility of BlackRock or any of its affiliates. Pursuant to the Mexican Data Privacy Law (Ley Federal de Protección de Datos Personales en Posesión de Particulares), to register your personal data you must confirm that you have read and understood the Privacy Notice of BlackRock México Operadora. For the full disclosure, please visit www.BlackRock.com/mx and accept that your personal information will be managed according with the terms and conditions set forth therein. BlackRock® is a registered trademark of BlackRock, Inc. All other trademarks are the property of their respective owners.
The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal. International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation, and the possibility of substantial volatility due to adverse political, economic or other developments. These risks are often heightened for investments in emerging/developing markets or smaller capital markets.
FOR INSTITUTIONAL, FINANCIAL PROFESSIONAL, PERMITTED CLIENT AND WHOLESALE INVESTOR USE ONLY. THIS MATERIAL IS NOT TO BE REPRODUCED OR DISTRIBUTED TO PERSONS OTHER THAN THE RECIPIENT.
© 2021 BlackRock, Inc. All Rights Reserved. BLACKROCK is a registered trademark of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners.
MKTGM1020L-1374690