67% of APAC insurance asset managers to boost outsourcing, driven by expertise & tech, report finds

A major strategic shift is underway in the Asia-Pacific (APAC) insurance investment sector. New research from Clearwater Analytics (NYSE: CWAN) is revealing that insurance asset managers are increasingly delegating funds to external experts. Two-thirds are planning to accelerate this trend over the next five years.

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The study, which surveyed executives at insurance asset management firms with a collective $2.6 trillion in assets under management (AUM) across Hong Kong, Singapore, and Australia, found that 35% of funds are already managed externally. This delegation is set to grow significantly, challenging traditional outsourcing motivations.

The Data: A Clear Trend Toward External Management

The research provides a clear snapshot of the current and future state of asset management in APAC’s insurance sector:

• Universal Practice: All surveyed firms currently delegate some funds to third-party managers, with external management ranging from 24% to 45% of their portfolios.
• Future Intent: A decisive 67% of executives forecast moving more assets to external managers in the next five years. Only 11% expect the balance to remain unchanged.
• Private Markets Focus: The shift aligns with a growing appetite for complex private market investments, which are expected to represent about a third of future allocations.

Strategic Drivers: Reputation, Transparency, and Control

Contrary to conventional wisdom, the move is not primarily driven by cost-cutting or a lack of in-house skills. The top reasons cited are strategic:

1. Improved Reputation & Acceptance of using third-party managers.
2. Greater Transparency and Reporting from external partners.
3. Enhanced Control over investment portfolios, model changes, analytics, and risk factors.
4. Greater Visibility into investment portfolios.

This indicates that insurers are seeking specialized expertise and advanced technological capabilities that external managers can provide. They are viewing outsourcing as a source of competitive advantage rather than a mere cost-saving tactic.

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Technology as the Key Enabler

The research underscores that technology platforms are fundamental to enabling this shift. They provide the control, transparency, and consolidated reporting that make managing a network of external managers feasible and efficient.

“It is striking that the trend is not mainly being driven by a desire to cut costs or because firms lack in-house expertise,” said Shane Akeroyd, Chief Strategy Officer and President of Asia Pacific at Clearwater Analytics.

 “Generally, the shift is being driven by technology and the growing use of platforms which enable insurers to have the control and transparency they need.”

Akeroyd added that with 96% of executives expecting increased M&A activity, leveraging external expertise for complex investments is becoming a strategic imperative.

A Paradigm Shift in Asset Management

The Clearwater Analytics study signals a paradigm shift in APAC insurance asset management. Outsourcing is evolving from an operational decision into a core strategic tool for accessing expertise, navigating complex markets, and leveraging technology—a trend poised to reshape the industry’s landscape significantly.