In 2025, insurers have a lower risk appetite and are looking to build a more flexible asset management approach amid inflation concerns and ongoing uncertainty, according to BlackRock’s annual global insurance survey.
Between July and September, the asset management giant surveyed 463 senior investment executives across 33 markets, representing US$23 trillion in assets under management.
Nearly two-thirds (63%) of respondents cited inflation as the top macroeconomic risk, followed by geopolitical tensions (50%) and a high-rate environment (42%), the 14th edition of BlackRock’s global insurance survey found. Recession risk, which was in first place in 2023, has dropped to fifth place this year (35%).
Considering the current macroeconomic environment, only 12% of insurers said they were looking to increase risk over the next 12 months, compared to 19% in 2022. Three-quarters of respondents said they were looking to maintain their current risk profile in the coming months.
Insurers are enhancing portfolio diversification by balancing across different asset classes and including private assets, the report said. About 93% of respondents said they expected to increase their private market exposure, with only 3% planning to reduce it.
Regarding insurers’ asset management operating model, 53% of insurers said they would shift from a fully in-house model to a hybrid model that combines internal expertise with external partners.
Insurers are also emphasizing capital management. About two-thirds (67%) of respondents said they planned on using reinsurance sidecars to share premiums and losses with investors and 54% expected to increase third-party capital over the next 12 months.
“This heightened focus on capital management is largely driven by insurers’ need to diversify balance sheet income through greater fee-based revenue, optimize balance sheets and capital structures, differentiate asset mixes via sidecars and access non-dilutive sources of capital,” the report said.
Public assets are still the most important allocation for insurers globally, the survey found. There was a preference for government bonds (44% plan to increase allocation in the next 12 months), cash and short-term instruments (42%) and ESG-related investments (40%).
Meanwhile, the demand for private assets remains high, with global insurers saying they planned to maintain (58%) or increase (30%) allocations, compared to 12% who said they expected to decrease allocations.
“Survey responses from 2018 to 2025 indicate a secular shift in appetite for private assets, independent of the rate cycle,” the report said.
Most (73%) insurers said they were investing in AI-related technology. The most common applications cited were evaluating investment opportunities (70%) and insurance risk underwriting (68%).
At the same time, the most common operational focus areas insurers cited were asset and liability management (62%), risk management (55%) and compliance (40%).