How can insurers turn M&As into a competitive advantage?
Firms are focused more on boosting operations than pushing rivals out.
Asia-Pacific insurers should prepare for a wave of mergers and acquisitions (M&A) in the next three years as the industry seeks scale and efficiency, according to a study by Clearwater Analytics Holdings, Inc.
The survey found that 96% of insurance asset management executives expect domestic M&A activity to rise. About 15% see a sharp increase in deals.
The October 2025 survey covered 150 senior executives at life, health and general insurers, as well as third-party investment managers. Together, they oversee about $3.8t in assets.
The main driver is the need to grow quickly to stay competitive. Executives also want to diversify risk across products and markets.
Executives in Hong Kong, Singapore and Australia cited the need to capture synergies, strengthen balance sheets, and improve economies of scale as reasons to consolidate.
In a separate report, Norton Rose Fulbright LLP said global insurance M&A likely increased last year after several major broker deals were completed or announced in late 2024.
Regulation is adding pressure. From 1 January 2025, Australia requires large companies to report the greenhouse gases they produce directly and indirectly across their operations and supply chains.
Rules on artificial intelligence (AI) are also tightening. Stricter requirements for high-risk AI systems, including those used in underwriting, are expected this year.
Singapore, Hong Kong and the UK are expanding governance frameworks for generative AI and large-scale models.
Clearwater said eliminating competitors ranked as the least important reason for deals. Firms are focused more on strengthening operations than pushing rivals out.
Shane Akeroyd, chief strategy officer and president for Asia-Pacific at Clearwater Analytics, said standalone operations might struggle in a market with heavier regulatory and investment demands.
He said the next three years would likely separate insurers that lead consolidation from those that are acquired.
As deal activity picks up, insurers face key questions, the answers to which could shape which firms emerge stronger in a tougher operating environment.
Questions to ponder:
- How are insurers integrating investment management with underwriting strategy?
- Could private equity play a bigger role in insurance acquisitions?
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EXPERT OPINION
A good place to start is to ask why do insurers merge in the first place? The most common reasons are to drive economies of scale, capture market share, achieve strategic diversification, and occasionally, navigate regulatory pressures.
For economies of scale to emerge, companies must follow through with the typical expense reductions to drive lower costs overall. Executing this can be a challenge. Historically, successful mergers have seen a strong management focus on rapid expense reduction and elimination of overlapping costs.
Market share can improve overnight with an M&A transaction, but success hinges on maintaining that over the long term. If distribution of products overlap, market share can wither easily. Portfolios of product or customer bases need to complement each other and not overlap too much.
Diversification is a clear prize from M&A and succeeds when underwriting skills in the expanded portfolio are retained. Greater capital efficiency can arise from good diversification, if the underwriting results continue to support the business lines.