What's Happening?
A recent study by Clearwater Analytics reveals that 85% of Asia-Pacific (APAC) insurers expect their investment portfolio risk to rise over the next two years. This trend follows a similar increase in risk over the past
two years, as reported by 72% of the surveyed insurance asset management executives. The study, which involved executives managing a combined $3.82 trillion in assets, highlights significant concerns about the under-resourcing of key areas in portfolio and risk management. Despite the shift towards higher risk, there are notable gaps in managing portfolio analytics and risk, with increased automation identified as a crucial tool for risk management. The research, conducted in October 2025, included senior executives from life, health, and general insurers in Hong Kong, Singapore, and Australia, as well as third-party investment firms working with life insurers in the region.
Why It's Important?
The anticipated increase in portfolio risk among APAC insurers is significant as it underscores the evolving landscape of investment strategies in the region. The shift towards higher risk profiles could have broad implications for the insurance industry, potentially affecting policyholders, regulatory frameworks, and financial stability. The under-resourcing of risk management functions, such as regulatory compliance and risk integration, poses challenges that could hinder insurers' ability to effectively manage increased risks. This situation highlights the need for technological advancements to streamline processes and enhance strategic risk management. The findings suggest that insurers must balance their risk appetites with adequate resource allocation to ensure sustainable growth and stability.
What's Next?
As APAC insurers navigate the increasing risk landscape, they may need to prioritize investments in technology to automate and enhance risk management processes. This could involve adopting advanced analytics tools and integrating data systems to improve cross-asset risk aggregation and scenario analysis. Regulatory bodies might also respond by tightening compliance requirements to ensure that insurers maintain robust risk management practices. Insurers may need to engage with stakeholders, including policyholders and regulators, to address concerns and align their strategies with evolving market conditions. The industry's ability to adapt to these changes will be crucial in maintaining financial stability and protecting policyholders' interests.
