Seven in 10 APAC insurers expect private equity returns to rise

The survey covers APAC insurers managing $3.82t in assets, Clearwater Analytics said.

Greater use of technology and third-party support has improved risk visibility for insurers across Asia-Pacific (APAC), even as firms expand into higher-risk private market assets, according to a new survey by Clearwater Analytics.

The study, conducted with insurance asset management executives overseeing a combined $3.82t in assets, found that 75% of respondents said risk visibility at their organisations had improved over the past two years. 

Almost all respondents, 95%, rated their firm’s risk visibility as either good or excellent.

Regulatory compliance requirements were cited as the main driver of increased technology spending, pushing insurers to adopt platforms that can integrate data from multiple sources and adapt risk models to changing market conditions. 

Executives also pointed to greater reliance on specialist third-party providers as a key factor behind improved oversight.

The survey highlighted a sharp increase in appetite for private market investments.

About 73% of APAC insurance executives said they expect the risk-reward profile of private equity and venture capital to increase significantly over the next 12 months. 

This was well ahead of other asset classes, including real estate and infrastructure at 49%, public fixed income at 47%, and private credit at 43%.

Despite the overall improvement, 18% of firms said their risk visibility had worsened over the same period. 

This was largely attributed to the growing complexity of investment strategies and a broader mix of asset classes.

The decline was most pronounced amongst third-party investment firms, where 40% reported weaker visibility, compared with 6% of life and health insurers and 2% of general insurers.

Firms reporting weaker visibility also cited reduced technology investment, difficulties in data integration, and staff reductions as contributing factors.

Clearwater Analytics said improved risk visibility is becoming increasingly important as insurers look beyond traditional assets and increase exposure to private markets, particularly amidst continued regulatory pressure across the region.