Insurers globally are bracing for another year of uncertainty, with inflation once again cited as one of the top macroeconomic risks, according to a recent report.

The insurance sector, however, is adapting to the situation with caution, but also seizing opportunities in both public and private markets, finds global asset management firm BlackRock’s 14th annual Global Insurance Report, which surveyed 463 senior investment professionals across 33 markets globally, representing US$23 trillion in assets under management. 

Even as risk appetite remains low – just 12% of insurers plan to increase their overall investment risk exposure in 2025 – allocations to private markets continue to rise. Nearly a third ( 30% ) of insurers expect to increase private allocations, with 58% intending to maintain their current exposure.

Notably, 79% of respondents expect their private markets exposure to change by 1% to 5%, 13% anticipate a change between 6 and 9%, and 1% expect a change of 10% or more over the next 12 months, influenced by market movements and asset allocation over the next 12 months. This signals the continued structural shift towards private assets that has persisted across rate cycles. Private credit, infrastructure and multi-alternative strategies remain the most cited opportunities.

A defining feature of this year’s report is the shift towards more flexible operating models. As the competitive and market dynamics continue to evolve, insurers are adapting.

Regarding their asset management operating model, 87% of insurers are changing their approach. Rather than solely relying on their in-house capabilities, many are adopting hybrid models that combine their internal expertise with external partners, supported by major investments in technology. Significantly, 69% of Asia-Pacific insurers indicate that they are moving to a hybrid operating model over the next 12 months, using both internal and third-party services. 

In addition, there is a growing emphasis on capital management, the report states, across all types of insurers. Over the next 12 months, 67% anticipate utilizing reinsurance sidecars, 54% expect to increase their use of third-party capital, and 53% plan to expand their captive management capabilities.

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.

Insurers also remain committed to their long-term sustainable and transition investing goals. For the second year in a row, insurers most commonly cite clean energy infrastructure ( 55% ) as the most attractive opportunity for sustainable and transition investing, followed by core infrastructure ( 51% ) and green bonds ( 38% ).

Asia-Pacific

Echoing global sentiment, Asia-Pacific insurers continue to demonstrate strong appetite for private assets, with 79% planning to maintain or increase their allocation to private markets over the next 12 months.

Notably, 64% of Asia-Pacific insurers identify multi-alternative strategies as their top target for expansion, outpacing peers in the Europe, Middle East and Africa region ( 52% ) and North America ( 37% ).

At the same time, public markets remain foundational to portfolios: 73% of insurers ( Asia-Pacific: 72% ) plan to maintain their current allocations and 21% ( Asia-Pacific: 24% ) plan to increase them. Within public assets, Asia-Pacific insurers have a preference for derivatives ( 39% ), government bonds ( 39% ) and municipal bonds ( 37% ), showcasing that they’re balancing safe investments with agile risk management instruments to adapt quickly and optimize portfolios in uncertain times.

As well, insurers are focused, not only on navigating current market volatility, but also on positioning their portfolios for long-term competitiveness. Many are rethinking their investment strategies and operating models. Private credit, infrastructure and technology continue to serve as useful tools to support insurers’ strategic initiatives. 

“Asia-Pacific insurers stand out for their focus on multi-alternative strategies, which can offer a more efficient path to portfolio diversification across private assets,” says Hiro Shimizu, BlackRock’s deputy head of Asia-Pacific and head of Asia-Pacific institutional business. “As insurers across the region navigate ongoing market volatility, this emphasis on diversification underscores their commitment to long-term resilience and growth.” 

Mark Erickson, the global insurance strategist for the asset manager’s financial institutions group, adds: “[Overall,] the story of 2025 is one of caution amid volatility, but also of conviction in the long-term opportunities private markets can offer. Insurers are navigating the environment with discipline while many are embracing new operating models, such as hybrid solutions to access private assets, and adopting investment, risk and AI [artificial intelligence] software to strengthen their portfolios.”