Australian insurers are increasingly reassessing where to deploy capital to capture emerging opportunities after years of maintaining disciplined portfolio positioning amid ongoing market dislocation and structural changes, according to Janus Henderson’s 2026 Australian Insurance Report.
The report, which captures the views of Australia’s senior insurance investment professionals and decision-makers across general, life and health insurers, highlights a sector that remains disciplined on risk, but increasingly deliberate in how it identifies and acts on opportunity with certain asset classes coming into focus.
In 2026, 94% of insurers are operating within or below their risk budgets, while the proportion of firms reporting they do not have a risk budget has fallen to zero, down from more than 10% in 2025.
While 65% of respondents expect no change to portfolio risk over the next 12 months, 29% anticipate increasing risk, highlighting a willingness to selectively deploy capital where opportunities emerge.
Private credit has moved firmly into the mainstream, with 84% of insurers now investing in the asset class, up from 54% a year ago. Insurers remain committed to private credit amid heightened regulatory scrutiny with more than half (53%) reporting that increased oversight from ASIC and APRA has had no impact on their approach to allocations.
While regulatory scrutiny has not prompted broad divestment, it is influencing how insurers manage private credit exposures. Consistent with a focus on stronger monitoring and oversight frameworks, four in five insurers (80%) identified valuation and impairment expectations as the primary regulatory concern associated with private credit investments.
The findings also indicate insurers are reviewing strategic asset allocations more frequently as they respond to a shifting macroeconomic backdrop. While interest rates and credit spreads continue to rank as the most significant market risks, insurers increasingly identify geopolitical dislocations as an opportunity rather than a threat. They are also being deliberate in their approach to enhance fixed income returns and increase exposure to private markets.
Inflation dynamics, interest rates and portfolio diversification remain the three most important considerations in insurers’ investment strategy reviews.
Key findings:
- More than two-thirds of insurers have recently reviewed or are currently reviewing their strategic asset allocation, up significantly from 2025.
- 41% of insurers expect to increase allocations to Australian asset-backed securities over the next 12 months, almost double the level recorded in 2025, while allocations in global securitised debt are also expected to increase.
- 44% of insurers expect to increase allocations to unlisted infrastructure, up from 30% in 2025, making it the most widely cited risk asset for increased allocations over the next 12 months.
- Interest in emerging market equities has more than quadrupled, with 13% of insurers expecting to increase allocations compared to 3% in 2025.
- While 90% of insurers are using AI for administrative and operational efficiencies, the use of AI in investment processes is rising rapidly. 26% of insurers now incorporate AI in the investment processes, representing an eight-fold increase since 2024.
- Over the same period, insurers running AI trials or pilot programmes grew from 33% to 52%, meaning that 78% of respondents are now actively engaging with AI across their investment workflow. Manager due diligence has also emerged as a key use case.
Janus Henderson Investors, which manages $176.5 billion in insurance-related assets globally, brought together Australia’s leading insurers and asset allocators at its annual Insurance Symposium last week to discuss these findings and the evolving investment landscape in further detail.
Matt Gaden, Senior Managing Director and Head of Australia at Janus Henderson Investors, said insurers are increasingly balancing caution with a readiness to pursue opportunities where they can improve portfolio resilience and returns:
“Insurers remain disciplined in how they manage risk, but they’re increasingly looking for opportunities that can enhance diversification and improve portfolio outcomes without compromising resilience.
“What’s particularly notable is the growing interest in areas such as securitised credit, private markets and selected alternative assets. These are not being viewed as opportunistic trades, but as strategic building blocks within a broader portfolio framework.”
“As insurers adapt to a shifting investment environment, the focus is increasingly on building portfolios that balance resilience with a flexibility to capture new sources of returns.”
The symposium explored the findings of the report and provided a forum for insurers to discuss portfolio construction, risk management, private markets, AI adoption and the opportunities emerging across the investment landscape.
