Global insurance companies are increasingly shifting their investment strategies towards private credit markets as they search for higher returns, with a new survey by Marsh showing that more insurers plan to increase exposure to the asset class over the next two years.
The 2026 Global Insurance Investments Survey by Marsh, a global professional services firm specialising in risk, reinsurance, capital and investment advisory services, revealed that private credit has emerged as the most preferred investment area among insurers surveyed.
According to the report, 57 percent of insurers said they intend to increase their allocation to private credit over the next 12 to 24 months, ahead of public investment-grade fixed income, which attracted interest from 48 percent of respondents.
The growing appetite for private credit reflects a broader shift among insurers as they seek alternatives to traditional fixed-income investments and explore opportunities that can deliver stronger returns while supporting long-term liabilities.
Private credit involves lending directly to companies or projects outside traditional public debt markets. The asset class has gained attention among institutional investors, including insurers, because it can provide higher yields and portfolio diversification compared with conventional bonds.
Marsh noted that insurers are becoming more selective in their approach, with many focusing on higher-quality segments of the private credit market. The survey showed that 40 percent of respondents identified investment-grade direct lending and private placements as preferred opportunities, while 38 percent highlighted investment-grade structured credit, asset-based finance, net asset value lending and fund finance.
The report represents a significant change from findings in the Mercer and Oliver Wyman 2024 Global Insurance Investments Survey, when only 32 percent of insurers planned to increase private credit allocations, compared with the stronger appetite recorded in the latest survey.
However, while demand for private credit is rising, insurers remain cautious about potential risks associated with the asset class.
The survey found that 66 percent of insurers identified narrowing illiquidity premiums and tighter credit spreads as their biggest concern, raising questions about whether investors are receiving adequate compensation for taking on less liquid assets.
Other concerns highlighted by insurers include weaker underwriting standards and loan covenants, cited by 54 percent of respondents, as well as rising defaults, widening spreads and increased use of payment-in-kind structures, which were mentioned by 51 percent.
David Morrow, global insurance proposition leader at Mercer, said private credit presents an attractive opportunity for insurers, particularly in asset-backed lending, as it allows them to diversify away from corporate risk while achieving improved yields compared with similarly rated public market bonds.
The survey also showed that larger insurers are leading the move into private credit markets. About 81 percent of insurers managing more than $25 billion in assets said they plan to increase their private credit exposure, compared with 46 percent of insurers managing less than $25 billion.
Life insurers recorded the strongest appetite for the asset class, with 73 percent planning to increase allocations, compared with 56 percent of health insurers and 40 percent of property and casualty insurers.
Despite the growing interest, Marsh highlighted a capability gap among insurers seeking to expand into private markets. Only 30 percent of respondents said they have most of the expertise required to invest confidently in private markets, while 29 percent said they possess only some of the required capabilities.
The firm said this limitation could affect insurers’ ability to effectively diversify their portfolios, manage liquidity and conduct proper due diligence, increasing reliance on external investment specialists for areas such as manager selection, capital modelling and risk management.
Artificial intelligence was another area examined in the survey, with findings showing that adoption remains limited across insurers’ investment operations.
More than half of respondents, representing 54 percent, said they are not making meaningful use of AI, while 29 percent said they are using the technology to analyse alternative investment data and research.
Among insurers already adopting AI, common applications include document review, data integration, scenario modelling, manager oversight and risk assessment.
The survey found that larger insurers are ahead in AI adoption, with three-quarters of organisations managing more than $100 billion in assets reporting meaningful AI usage, compared with about one in ten insurers managing less than $1 billion.
Marsh conducted the 2026 Global Insurance Investments Survey between March and April 2026, gathering responses from 123 insurers across 24 countries representing more than $4 trillion in investment assets.
