CWAN Report: Insurance Industry’s $2.7 Trillion Shift to Alternative Investments Creates Technology Gap

CWAN Analysis of 400 Insurers Shows Some Insurers Now Allocate 40-50% in ‘Alternatives’

Clearwater Analytics (NYSE: CWAN), the most comprehensive technology platform for investment management, today released industry research revealing that alternative investments have fundamentally transformed from a fringe strategy to a portfolio cornerstone, now comprising nearly one-third of the US insurance industry’s assets – representing approximately $2.7 trillion – as insurers abandon traditional portfolio strategies. Similar structural shifts are also emerging across the UK and continental Europe as insurers pursue diversification, yield and liability-matching under Solvency II and evolving capital rules.

The report, “Are ‘Alternatives’ Still Alternative?”, combines industry-wide NAIC data with analysis of approximately 400 CWAN insurers representing $4.4 trillion in combined assets, including UK and European insurers on the CWAN platform, providing granular insight into alternative investment adoption patterns across the insurance sector.

CWAN’s Key Data Findings Challenge Industry Conventional Wisdom:

• “Alternatives” Classification Requires Redefinition: What was once considered a fringe strategy now represents approximately $2.7 trillion (or nearly a third) of all insurance industry assets, marking a permanent, structural shift rather than a cyclical trend.
• Private Credit Dominates Alternative Allocations: The report reveals which specific alternative asset classes have gained the most traction, with private credit assets—including privately placed bonds and mortgage loans—leading the charge.
• Technology Infrastructure Crisis Emerges: Legacy systems are failing to keep pace with alternative asset growth, with CWAN data showing 3 to 5x longer processing times for alternative asset operations.
• Platform Data Reveals Allocation Disparities: CWAN’s proprietary database shows significant variation in alternative adoption, with detailed breakdowns available in the full report.
• Post-Pandemic Structural Changes: The report analyzes which pandemic-era trends became permanent fixtures and identifies emerging patterns that will shape the next decade of insurance investing.

“What this research shows is that alternatives have moved from the periphery to the core of insurance portfolios, they’ve already won,” said Kirat Singh, President, Risk and Alternative Assets, CWAN. “What we’re seeing with our clients is leading insurance companies shifting capital to privates and alts, some at 35% while others going as high as 70-80%. The real challenge now is operational, and having an open, scalable technology infrastructure becomes essential to handle this complexity.”

The research combines industry-aggregated NAIC data with CWAN’s proprietary database, which processes over $10 trillion in global assets, revealing allocation patterns and operational challenges that smaller datasets cannot detect. The study found wide variation among individual insurers—with exposure to alternatives ranging from the low single digits to well over half of some portfolios—but identified upward, structural trends driven by the need for diversification, predictable yields, and liability matching.

Implications for the Investment Industry

The findings suggest that traditional portfolio construction models require fundamental revision, having profound implications for asset managers, consultants, and institutional investors across all sectors.

“This research represents one of the most comprehensive analyses of alternative investment adoption in the insurance industry,” said Matthew Vegari, Head of Research at CWAN. “By combining industry-wide NAIC data with analysis of our $4.4 trillion client database, we’re seeing patterns that smaller datasets simply cannot reveal, including a technology infrastructure gap that threatens operational stability. Institutional investors are embracing newer asset classes that legacy systems simply can’t handle to any meaningful degree. Allocators need to see their investments in one place, on one system, especially in today’s risk environment. CWAN delivers just that.”

The complete research report is available for download here.

About CWAN

Clearwater Analytics (NYSE: CWAN) is transforming investment management with the industry’s most comprehensive cloud-native platform for institutional investors across global public and private markets. While legacy systems create risk, inefficiency, and data fragmentation, CWAN’s single-instance, multi-tenant architecture delivers real-time data and AI-driven insights throughout the investment lifecycle. The platform eliminates information silos by integrating portfolio management, trading, investment accounting, reconciliation, regulatory reporting, performance, compliance, and risk analytics in one unified system. Serving leading insurers, asset managers, hedge funds, banks, corporations, and governments, CWAN supports over $10 trillion in assets globally.Learn more at www.cwan.com.

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