APAC Insurers Set to Embrace Greater Investment Risks Amid Push into Private Markets in 2025-2027

Insurance companies in the Asia-Pacific region are gearing up for bolder investment strategies, with a strong emphasis on elevating portfolio risk levels to capture higher yields and diversification benefits. A comprehensive study by Clearwater Analytics reveals that executives are prioritizing advanced technology and outsourcing to navigate evolving regulatory landscapes and complex asset classes.

Conducted in October 2025, the research involved in-depth interviews with 150 senior leaders from life, health, and general insurance firms, along with third-party asset managers serving insurers. These participants oversee a staggering $3.82 trillion in assets across key markets including Australia, Hong Kong, and Singapore.

Rising Appetite for Risk in Insurance Portfolios

The survey uncovers a notable shift toward higher-risk investments among APAC insurers. An overwhelming 85% of participants anticipate an elevation in their portfolio risk levels over the coming two years. This builds on recent trends, where 72% reported increased risk exposure in the prior biennium.

This move is largely driven by the pursuit of enhanced returns, portfolio growth, and broader diversification, especially as interest rates fluctuate and credit conditions evolve. Insurers are increasingly allocating to alternative assets, with projections indicating that private markets could comprise up to 33% of their holdings within five years. Sectors like private credit, infrastructure, and real estate are gaining traction for their potential to deliver stable income and hedge against volatility.

Executives emphasize automation as the top strategy for effective risk management, surpassing options like stricter regulations or capital requirements. Integrated tech solutions and robust data analytics are seen as essential for maintaining solvency while pursuing ambitious growth targets.

Shane Akeroyd, Chief Strategy Officer and President of Asia-Pacific at Clearwater Analytics, commented:

Insurance firms in the region are actively pursuing opportunities in higher-risk assets for the upcoming period. Notably, as they expand their risk parameters, leaders highlight the urgency for bolstered capabilities in compliance, risk oversight, and data handling. Cutting-edge platforms address these challenges by automating laborious tasks, allowing teams to prioritize high-level strategy over routine operations.

Addressing Operational Challenges and Resource Shortfalls

Despite growing confidence in risk-taking, the report identifies significant hurdles in supporting infrastructure. 86% of leaders call for greater investment in unified risk assessment across diverse asset types, underscoring efforts to consolidate views on exposures spanning various classes, units, and strategies.

Additionally, 77% advocate for enhanced resources dedicated to meeting regulatory demands. Other critical areas flagged include streamlining outdated systems, improving liquidity forecasting, reducing operational complexities, refining valuation processes, advancing data consolidation, and bolstering stress testing frameworks.

As insurers deepen involvement in alternatives and credit strategies, demand is rising for comprehensive platforms that deliver enterprise-wide insights into performance and risks, moving away from fragmented, manager-specific views.

Growing Reliance on External Asset Managers

The study also explores outsourcing trends, finding that insurers currently delegate an average of 35% of assets to external specialists, with ranges from 24% to 45% across firms.

Over the next five years, 67% predict an expansion in outsourced management. In contrast, 22% expect to internalize more functions, and 11% anticipate stability in the current in-house versus external balance.

This hybrid approach allows internal teams to maintain strategic control, allocation decisions, and overall risk accountability, while leveraging external expertise for specialized areas such as illiquid investments requiring deep market knowledge and infrastructure.

Globally, insurance outsourcing hit a record $4.5 trillion in 2025, up 24% year-over-year, with private asset allocations surging to $800 billion. In APAC, this trend is fueled by strategic needs for superior governance, analytics, and tech integration rather than mere cost savings.

Broader APAC Insurance Investment Trends 2025

This Clearwater Analytics research aligns with wider industry shifts, where APAC insurers are modernizing asset-liability management (ALM) systems amid regulatory updates like IFRS 17 and risk-based capital frameworks. Over half plan increased spending on data analytics (56%) and AI/ML integration (55%) in the coming year to handle diversification and new instruments more effectively.

As private markets expand, insurers seek partners offering advanced reporting, cash flow modeling, and compliance support powered by AI and cloud technologies.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.