Inflation, market instability, and the rise of artificial intelligence are among the top concerns for insurers, a new survey reveals.
Trade disputes and inflation are emerging as central risks for insurers, according to the latest annual survey by Goldman Sachs Asset Management (GSAM). The survey, which gathered insights from industry executives, shows a significant shift in concerns, with nearly one-third (32%) of chief investment officers and chief financial officers highlighting trade tensions as a major macroeconomic risk. This marks a notable rise from last year, with trade disputes not even appearing on the radar of most respondents.
“We closed the survey about six weeks ago,” said Michael Siegel, GSAM’s global head of insurance asset management and liquidity solutions. “If we conducted the survey today, the number of executives citing trade tensions would likely be much higher.”
Trade Policies Fuel Market Uncertainty
Since January, trade disputes have escalated under President Donald Trump’s administration, with new tariffs imposed on major trade partners such as China, Canada, and Mexico. A Wall Street Journal report from March 23 indicated the administration is considering narrowing the scope of tariffs set to take effect in April, opting for a more targeted approach. These shifting trade policies contribute to broader economic instability, intensifying concerns among insurers over portfolio risk.
Despite growing concerns around trade, inflation remains the number one risk for the industry. In the GSAM survey, 52% of executives cited inflation as their top concern, a rise from 42% in 2024. Worries about a potential U.S. recession have eased slightly, with 48% of respondents now viewing it as a significant risk, compared to 52% last year.
Geopolitical Instability and Market Volatility Persist
Geopolitical uncertainty and market fluctuations also remain pressing issues. Forty-seven percent of executives highlighted the risk of volatility in credit and equity markets, while 43% pointed to geopolitical instability as a concern. These figures reflect a slight decrease from last year but underscore the continuing challenges insurers face in navigating an unpredictable economic environment.
Shift Toward Private Investments and AI Integration
In response to ongoing economic uncertainties, insurers are increasingly diversifying their portfolios, with a notable shift toward private investments. According to the survey, 62% of executives plan to increase their exposure to private assets in the next year, with private credit emerging as one of the most attractive asset classes for returns.
Simultaneously, artificial intelligence (AI) is gaining traction within the industry. Almost half (48%) of survey respondents reported already using AI in their operations, while 42% indicated plans to explore AI adoption in the coming year. This growing reliance on AI highlights its potential to reshape the sector, optimizing operations and decision-making processes.
Industry Shifts and Strategic Recalibrations
GSAM’s survey, titled The Great Pivot, collected responses from 405 insurance executives who collectively manage $14 trillion in global balance sheet assets. Life insurers comprised the largest group of respondents (43%), followed by property and casualty insurers (29%), multiline insurers (16%), reinsurers and health insurers (both 5%), and captives (1%).
“These findings reflect a broader shift in the industry towards more diversified and illiquid investment portfolios,” Siegel noted. “Insurers are diversifying their holdings, taking on more duration and credit risk, and increasingly turning to less liquid investments.”
As insurers continue to adapt to the evolving economic landscape marked by trade tensions, inflation, and market volatility, strategic shifts are expected to remain a key theme. The coming months will likely provide further insight into how the industry is adjusting its risk management strategies and embracing new opportunities.
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