Questions involving cryptocurrencies were included in the 11th edition of The Goldman Sachs Asset Management Insurance Survey for the first time. It also covered inflation, investment uncertainty, risk management, yield maximization, and ESG as some of the themes.
Insurance companies have a reputation for sitting on the conservative end of business for far too long. But, if anything, the results suggest that the situation might be changing for good and that the industry is warming up to digital assets like Bitcoin and Ethereum.
The survey’s respondents included 328 chief investment officers (CIOs) and chief financial officers (CFOs), representing almost half of the $26 trillion global insurance business. 6% of the contributors amounted to 20 people who responded positively. The findings are even more surprising because of the recent downturn in the crypto markets.
“We think that the survey is very representative of what the industry is thinking”Mike Siegel, Goldman Sachs’ global head of insurance asset management.
US insurers were much more affirmative in their response, with 11% interested in crypto, followed by Asia at 6% and Europe hovering around 1%. Further, 1% of the respondents were willing to increase their holdings in crypto over the next 12 months, and 7% will stick to their current portfolios.
Crypto emerged as the 5th most preferred asset class behind equity, commodities, alternate market equities, and debt funds. Conversely, real Estate saw the most downfall in the survey.
While insurance companies have preferred to stay away from crypto investments, the underlying tech that powers crypto, blockchain – has found significant adoption in the industry.
Prominent insurance players like Allianz from Germany and Aon from Ireland have implemented blockchain in various applications. Blockchain is believed to be ideal for the insurance sector as the business involves large-scale record maintenance, settlement of claims, and payment facilitation.
The vast majority of the industry is still unwilling to invest in cryptocurrencies as they await more clarity on the regulatory front and maturity of the technology.
Investors listed inflation and interest rate hikes as the biggest concerns to their portfolio returns for 2022.