Insurers rank regulatory changes, geopolitics as top risks

APAC insurers anticipate high inflation and strong economic resilience.

Insurers pinned regulatory developments (68%) and rising geopolitical tensions (61%) as top macro risks, according to BlackRock’s 13th edition of Global Insurance Report.

In 2024, elections are expected to heighten uncertainty around policymaking. In terms of economic outlook, 86% of respondents in EMEA and 87% in North America anticipate central banks will manage a soft landing as inflation eases. 

However, in Asia Pacific, 76% foresee high inflation and strong economic resilience, whilst opinions in Latin America remain mixed, with 18% expecting a hard landing.

Interest rate risk (69%) and liquidity risk (52%) were identified as major market concerns. Higher interest rates have improved investment yields, and insurers are taking advantage by increasing allocations to both public and private markets. 

Public fixed income remains a key part of investment portfolios, whilst private markets—particularly private debt—are growing in importance. Insurers are expanding into non-bank lending, driven by regulatory changes and competition for bank funding.

Nearly all respondents (99%) have set transition objectives within their investment portfolios. Insurers are increasingly involved in transition finance, mobilizing capital and working with asset managers to offer blended finance solutions. 

Similarly, the global infrastructure financing gap presents opportunities for insurers to invest in traditional and digital infrastructure. Clean energy and transition technologies are top targets for insurers expanding their low-carbon transition strategies.

According to 40% of respondents, having investment partners who understand both the insurance business and operating model is critical to success.