Institutional investors are increasing their allocations to insurance-related assets in search of alternatives to traditional private markets strategies and more resilient portfolios, according to research from Gallagher Securities.

Its global analysis found that 60 per cent of institutional investors planned to increase allocations to insurance-related assets over the next two years.

More than half had already committed over a quarter of their portfolios to insurance-related investments.

The report stated that insurance-linked securities (ILS), such as catastrophe bonds, were attracting the largest share of new capital, as they offered access to returns that were largely uncorrelated with broader equity and credit markets.

Insurance risk was therefore increasingly being assessed alongside private credit and other alternative strategies within institutional portfolios.

Demand was found to be being driven by diversification needs, consistent return profiles, and access to underwriting performance as a distinct source of return.

However, investors were becoming more selective as allocations increase, with liquidity constraints, valuation complexity and transparency requirements playing a greater role in how capital is deployed, especially among larger, multi-asset allocators.

Gallagher Securities said that the rise in institutional investment was reshaping how insurance risk was financed, which gave insurers access to a wider and more competitive pool of funding beyond traditional reinsurance models.

“We’re in a market where capital wants access to high quality underwriting, and insurers want stable, scalable capacity,” said Gallagher Securities CEO, Jason Bolding. “The value comes from building the bridge between the two.

“Insurers are presented with a unique funding environment in 2026. There is no shortage of investors keen to put capital to work in insurance — whether through public or private equity, traditional reinsurance or the ILS market.

“But this availability and breadth creates its own challenges. For senior insurance leaders and ceded reinsurance buyers, the question today is not one of simply securing capacity but of identifying the right capital, structured in the right way, to deliver resilience, efficiency and sustainable growth across the market cycle.”

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