Investment Risk Survey: Insurers Optimistic About 2024 Markets, Taking More Risk, and Leveraging AI Tools
U.S. insurers are optimistic about investment markets in 2024 and expect to take on more investment risk, according to a fall 2023 survey of U.S. insurance decision makers commissioned by Conning. The survey also found that insurers think the benefits of adding artificial intelligence tools to the investment process are worth the risks. To learn more and access interactive graphics examining key data points, see below.
U.S. insurers appear to be optimistic about investment conditions for 2024 (see Figure 1) and expect to take on more investment risk, according to a recent survey of investment 300 decision-makers in the U.S. insurance industry commissioned by Conning.1
And while insurers expect their investment risk tolerance may raise, higher yields in traditional public market fixed-income sectors have made those strategies one of the larger areas of expected portfolio increases. Other sectors that insurers expect to allocate more to include private assets such as private equity, private credit and private placements, and real assets including infrastructure and real estate.
Insurers also said that despite their concerns about use of artificial intelligence (AI) and machine learning (ML) tools in the investment process, they believe the benefits of the technology outweigh the risks (see Figure 2) and have already begun to incorporate the tools into their investment processes.
The responses suggest U.S. insurers remain resilient and ready to embrace new challenges following a year of significant inflation, falling bond portfolio values as interest rates rose, and the rapid growth of AI technologies. (The survey was conducted prior to the U.S. Federal Reserve’s December outlook suggesting multiple interest rate cuts in 2024.)
The growing complexity of managing insurance portfolios may also lead more insurers to consider outsourcing some or all investment duties, and the survey probed insurers’ considerations in these decisions.
1 In 2023, surveys were sent to approximately 2,000 U.S. insurance company investment professionals and yielded 300 responses. In 2022, surveys were sent to approximately 4,000 U.S. insurance company decision makers with 303 qualified responses. 2021 survey was sent to approx. 7,000 U.S. insurance company decision makers with 280 qualified responses. Qualtrics, LLC was paid a fee for services rendered.
The Conning U.S. Insurers Survey – Investment Focus utilized survey technology provided by Qualtrics, LLC. Results may not be representative of any one respondent’s experience as they reflect an average of all, or a sample of all, of the experiences of surveyed U.S. insurance company decision makers. In 2023, surveys were sent to approximately 2,000 U.S. insurance company investment professionals and yielded 300 responses. In 2022, surveys were sent to approximately 4,000 U.S. insurance company decision makers with 303 qualified responses. 2021 survey was sent to approx. 7,000 U.S. insurance company decision makers with 280 qualified responses. Qualtrics, LLC was paid a fee for services rendered.
Conning (www.conning.com) is a leading investment management firm with a long history of serving the insurance industry. Conning supports institutional investors, including insurers and pension plans, with investment solutions, risk modeling software, and industry research. Founded in 1912, Conning has investment centers in Asia, Europe and North America.
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