APAC insurers turn to tech as private market risk appetite rises

Asia-Pacific (APAC) insurers are sharply increasing expectations for risk-adjusted returns from private markets, driven by improved risk visibility supported by technology investment and greater use of third-party specialists, according to new research from Clearwater Analytics (CWAN).

The study, based on interviews with insurance asset management executives overseeing a combined US$3.82 trillion in assets, found that 75% of respondents believe risk visibility at their organisations has improved over the past two years, while 95% now rate their firm’s risk visibility as excellent or good.

Regulatory pressure is emerging as the primary catalyst for this shift. Insurers report increasing use of investment platforms that integrate data from multiple sources and allow models and analytics to be updated in response to volatile market conditions. As insurers expand into more complex and less liquid assets, enhanced risk oversight is becoming a regulatory and operational necessity.

Private markets are a particular focus. The research shows a dramatic surge in appetite for private equity and venture capital, with 73% of respondents expecting the risk/reward profile of these asset classes to increase significantly over the next 12 months, far exceeding expectations for other investments.

Executives from life, health, and general insurers based in Hong Kong, Singapore, and Australia also highlighted the growing role of specialist third-party providers in improving risk visibility, although the benefits are not evenly distributed across the market.

Nearly one in five firms (18%) reported a deterioration in risk visibility over the past two years, citing increasingly sophisticated investment strategies and a broader mix of asset classes as key challenges. The decline was most pronounced among external asset managers, with 40% of third-party firms reporting reduced visibility, compared with 6% of life and health insurers and just 2% of general insurers.

“APAC insurers are working hard to improve risk visibility with technology and support from specialist third parties key to the improvements over the past two years,” said Shane Akeroyd, Chief Strategy Officer and President of Asia Pacific at CWAN. He added that “improved risk visibility is critical as organisations increasingly see opportunities in private markets… Making full use of enhanced technology and platforms that can integrate data plays a central role… given the regulatory pressures… across the region.”

Collinson International recently partnered with insurance provider Sompo to launch flight delay coverage in three new Asian markets.