Insurance Sector Softens for Crypto, Says Goldman Sachs Survey

Insurance Sector Softens for Crypto, Says Goldman Sachs Survey

The insurance sector for ages used to sit far on the conservative end of the business. But even their situation is changing, as part of the insurance industry companies open up for digital currencies for the first time in history.

The American investment bank giant Goldman Sachs issued its annual insurance survey, stating that 6% of insurance sector execs have invested in digital currencies or are considering doing so. 

The survey incorporated the views of 328 Chief Investment Officers (CIOs) and Chief Financial Officers (CFOs) of the insurance companies, which are responsible for more than $13 trillion in business. This is almost half of the global $26 trillion insurance industry.

goldman sachs crypto insurance sector

The respondents also ranked cryptocurrencies as the 5th asset class that they expect to deliver the highest total returns in the next 12 months. Insurers placed private equities, commodities, emerging market equities and real estate equities as better bets than cryptos in terms of forecasted annual returns. 

Only 1% of respondents (thus 3.2 insurance companies) revealed plans to increase their allocations in cryptocurrencies over the upcoming 12 months. 7% or almost 23 companies said they’ll continue to maintain their crypto investments.

Insurers from the United States seemed to be a bit more interested (11%) in digital currency investments than their counterparts from Asia (6%) or Europe (1%), according to a Goldman Sachs survey.

Appetite for Risk Changed

The respondents managing $13 trillion in the insurance industry also revealed the shift in risk appetite for their investment portfolio. According to the survey, their overall investment risk tolerance turned in a negative direction for the first time since 2019. The bank explains the decrease as an outcome of the uncertainty of where investment opportunities lie in turbulent 2022.

“In a sharp reversal from prior years, insurers now see rising inflation and tighter monetary policy as the largest threats to their portfolios,” said Goldman Sachs. 

Why You Should Care

The recognition and tolerance for digital currencies as an asset class are increasing. The fact that it reached even the most conservative sectors like insurance is a positive sign of the maturing industry, which has become more and more explored by institutional investors.  

Back to Top
Close Zoom
Don't push your luck