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Our views 29 January 2021

Insurance investment outlook for 2021

5 min read

For insurers, 2020 was a year of facing extreme uncertainty akin to battling the elements. The first part of the year involved fighting fires, with Covid-19 causing steep falls in investment values, thin asset liquidity and stresses to operating models.

With the materially increased volatility in markets, insurers had to regularly air their issues to boards and committees – through more regular and detailed reporting on investments and risk exposures. Throughout the year, insurers have been subject to ever-increasing expectations around protecting the earth through the integration of environmental, social and governance (ESG) factors into risk and investment strategies and disclosures – with a particular focus on mitigating climate change.

Since the initial crisis, many insurers have been treading water around their investment policies, with a reluctance to make larger strategic changes (particular risking up asset portfolios) until there is more certainty around the eventual resolution of the pandemic, and with announcements around possible regulatory changes delayed until 2021. However, with increasing clarity around the outlook, particularly with positive news about vaccines, insurers are now looking to conduct a fundamental review of their investment policy and implementation approach, and embracing this (relatively) increased certainty.

Read in full: Insurance outlook for 2021