A recent survey by Clearwater Analytics reveals that nearly 10% of insurers in the Asia-Pacific (APAC) region struggle with their asset liability management (ALM) systems’ ability to adapt to changes in asset allocation and new data sources. The study, which involved insurance asset management executives from firms managing a total of $3.823t, highlights significant room for improvement in these systems.
The survey, conducted with senior executives from life and health insurers, general insurers, and third-party investment firms in Hong Kong, Singapore, and Australia, identifies regulatory demands as the primary driver for increased technology spending on ALM. These demands include enhanced requirements for stress testing, solvency reporting, and risk disclosures.
Additionally, the shift towards illiquid and alternative asset classes necessitating sophisticated risk models ranks as the second major factor. Advances in computing, such as cloud scalability and artificial intelligence (AI), are also pushing insurers to invest in technology for better risk and capital efficiency insights.
Over the next year, 56% of insurers plan to focus on data analytics, whilst 55% aim to integrate AI and machine learning. Improving customer experience, portfolio management systems, and cloud technology are also key priorities.
Shane Akeroyd, Chief Strategy Officer and President of Asia Pacific at Clearwater Analytics, emphasised the importance of modernising ALM systems, stating, “Insurers recognise that modern ALM requires speed, precision, and integration that legacy systems simply can’t deliver anymore.”
The findings underscore the critical need for insurers to enhance their ALM systems to remain competitive and compliant in a rapidly evolving financial landscape.
