SINGAPORE — A study by Clearwater Analytics (CWAN) shows a growing number of insurance asset managers in Singapore actively planning to outsource fund management. This trend comes amid the rapidly changing insurance market in APAC.
Executives managing $3.8 trillion in assets across APAC are facing increased market pressures, driven by slowing growth, tightening regulations, and legacy systems that hamper innovation.
To better understand how the industry is navigating these, CWAN surveyed 150 senior executives across Hong Kong, Australia, and Singapore.
The respondents were evenly split across these markets, and their responses revealed a fundamental shift in operations ahead: forward-thinking insurers are making critical decisions, including delegating assets to outsourcing partners.
The Shift to Third-Party Managers
Currently, the average insurance firm handles 65% of its funds internally, while 35% is delegated to an external manager. All surveyed insurers were observed to allocate some of their funds to third-party managers, ranging from 45% to 76%. However, this is expected to change over the next five years, as insurers are inclined to outsource a greater share of their assets.
When asked why they’re planning to outsource, here are the top reasons:
- An increased acceptance
- Improved transparency and reporting
- Greater control over model changes, risks, and investment portfolio
- Greater visibility into the investment portfolio
- Greater emphasis on aligning assets with liabilities
Opportunity-Rich Development for Outsourcing Partners
On the other hand, some insurance firms remain hesitant about outsourcing due to the persistent challenge of integrating multiple data sources into a usable, consistent format. Of the surveyed executives, 35% strongly agreed and 57% generally agreed with this issue.
This signals the need for outsourcing companies or external asset managers to work on advanced data management platforms capable of validating and centralizing investment data—an emerging leading differentiator for executives. As more insurers shift their beliefs about how success is achieved, outsourcing companies that can provide greater portfolio control and transparency will offer an excellent value proposition to their clientele.
