APAC insurers slump to 23% confidence in complex asset tools

Only 42% of regional executives rate their current systems as excellent for data integration.

Asia-Pacific insurers are facing growing investment management challenges as they increase exposure to private markets and rely more on third-party asset managers, according to new research by Clearwater Analytics.

The study, which surveyed 150 senior insurance asset management executives in the region overseeing a combined $3.8t in assets under management, found data integration to be the most significant challenge. 

Of those surveyed, 149 said that receiving data from external managers in multiple formats makes it harder to access key information. 

Despite its importance, only 42% of respondents rated their systems as excellent in handling data integration. 

Asset complexity ranked as the second most pressing issue but recorded the weakest performance, with only 23% expressing confidence in their systems’ ability to manage complex instruments such as structured products and exotic assets. 

Coverage and consolidation, which involves aggregating risk exposures across portfolios and trading desks, ranked third amongst the key concerns highlighted by respondents. 

The challenges are expected to intensify as insurers shift investment strategies. 

The research found that 88% of respondents plan to increase portfolio diversification over the next three years. 

Allocations to private markets are projected to rise from 20% of holdings to 33% within five years. At the same time, 66% of insurers are increasing their use of third-party asset managers, further adding to data management complexity. 

Insurers are responding by expanding recruitment efforts across different sectors, hiring more risk management specialists, investing in new tools and platforms, increasing staff training, and outsourcing more functions to external providers. 

The survey also found that 92% of executives agreed insurers are now working with more asset managers than before, contributing to the rise in fragmented data sources. 

Clearwater Analytics Chief Strategy Officer and Asia-Pacific President Shane Akeroyd said the expansion into private markets and growing reliance on external managers are increasing operational and risk management demands. 

He noted that 72% of firms reported higher risk profiles, whilst 96% expect mergers and acquisitions activity to increase, suggesting insurers that address data and system capability gaps early may gain a competitive edge as industry consolidation continues.