Almost half of Australian insurers plan to increase their investment portfolio risk over the next year, according to a report by asset manager Janus Henderson Investors.

Four in five have either recently reviewed their strategic asset allocation or are now doing so.

“Insurers are clearly shifting gears,” Janus Henderson head of Australia Matt Gaden said. “The move from defensive positioning to proactive portfolio re-risking reflects a broader industry trend towards embracing private markets and seeking differentiated sources of return.”

The report is based on an annual survey, conducted in May, of executives and investment professionals across general, life and health insurance providers, government insurance and workers’ compensation, plus asset consultants.

General insurance accounted for 54% of responses.

Janus Henderson says the findings reflect “a cautious optimism and a willingness to explore new avenues for growth, even as market volatility and regulatory pressures persist”.

Mr Gaden says environmental, social and governance integration continues, despite media reports to the contrary. Nearly nine in 10 respondents factor ESG considerations into their portfolios. 

“Corporate policy and social impact remain the primary drivers, underscoring the industry’s commitment to responsible investing and long-term value creation,” he said.

About 12% of insurers incorporate artificial intelligence in their investment processes.

“AI, while still in its early stages, is beginning to reshape operational processes,” Mr Gaden said. “Although its application to investment decision-making remains limited, nearly half of respondents plan to trial AI tools in the coming year – a sign that innovation is firmly on the agenda.”