How can insurers balance outsourcing and data control?

Rising data volumes are becoming harder to access and use effectively.

Singapore insurers are increasingly turning to external asset managers to improve portfolio oversight and reporting, but the shift is adding to growing data management pressures, according to a study by Clearwater Analytics Holdings, Inc.

The research, covering insurers overseeing about $1.04t in assets, found that an average of 34% of portfolios are managed by external firms. All respondents outsource part of their investments, with allocations ranging from 24% to 45%.

The trend is set to continue, with 63% of insurers planning to increase external mandates, compared with 26% that expect to bring more assets in-house, according to the December report.

The main drivers are improved control over investment portfolios and better transparency, rather than cost savings or gaps in internal expertise.

However, the growing reliance on third-party managers is complicating data management. About 92% of respondents said rising data volumes—often in different formats—are becoming harder to access and use effectively. Data integration, coverage, and consolidation were cited as the biggest challenges.

The issue is made worse by stricter regulatory requirements. Insurers are facing more demanding standards on stress testing, solvency reporting, and risk disclosures, pushing them to upgrade asset-liability management systems and invest in new technology.

More than half of the respondents said they plan to expand their use of data analytics over the next 12 months, whilst 55% seek to adopt artificial intelligence and machine learning tools to handle more complex datasets.

The shift toward external managers also reflects broader portfolio changes. About 84% of insurers expect to diversify more, with private market allocations projected to rise from 20% to 36% within five years. These investments typically generate more complex and less standardised data, adding to operational strain.

As a result, insurers are rethinking their workforce and processes. Firms are hiring more risk specialists, investing in digital tools, and reducing reliance on manual processes such as spreadsheets, whilst outsourcing more operational functions.

Clearwater Analytics said insurers are becoming more comfortable with external managers, particularly for complex assets, as technology improves visibility. Still, managing fragmented data flows remains a key challenge as outsourcing expands.

Questions to ponder:

• At what point does outsourcing become inefficient?
• What’s the biggest bottleneck—technology, processes, or people?