Insurers Increase Private Credit Allocations as Marsh Survey Highlights Growing Demand for Discipline, Expertise and Technology
Marsh has released the findings of its 2026 Global Insurance Investments Survey, revealing that insurers’ appetite for private credit continues to grow, although investment decisions are becoming increasingly selective and focused on risk management.
The survey, conducted by Marsh in collaboration with Mercer and Oliver Wyman, highlights a significant shift in insurers’ investment intentions compared with the results of the 2024 Global Insurance Investments Survey.
More than half of insurers surveyed, or 57%, said they plan to increase their exposure to private credit over the next 12 to 24 months.
Private credit was the leading area of planned investment growth among respondents, ranking ahead of public investment-grade fixed income, which was cited by 48% of insurers.
The results represent a significant increase in demand compared with the previous survey, when 37% of insurers planned to increase allocations to fixed income and 32% intended to increase their exposure to private credit.
The findings indicate that private credit has become an increasingly important component of insurers’ investment strategies.
However, the survey also shows that insurers are becoming more selective about the areas of private credit they want to pursue.
Rather than pursuing the asset class broadly, insurers are increasingly focused on segments that offer attractive risk-adjusted returns, investment-grade characteristics and opportunities to diversify traditional corporate credit exposure.
Investment-Grade Private Credit Leads Demand
The survey showed that insurers’ strongest interest is concentrated in investment-grade segments of the private credit market.
Approximately 40% of insurers identified investment-grade direct lending and private placements as areas of interest.
Another 38% expressed interest in investment-grade structured credit, asset-based finance, net asset value lending and fund finance.
These areas can provide insurers with opportunities to earn additional yield while maintaining exposure to credit investments that may align with their risk and capital requirements.
David Morrow, Mercer’s Global Insurance Proposition Leader, said private credit remains attractive to insurers because of the potential to improve portfolio diversification and generate higher yields.
“Private credit is a compelling opportunity for insurers, especially in the asset-backed space,” Morrow said.
He noted that asset-backed investments can help insurers diversify away from traditional corporate credit risk while potentially offering a meaningful yield advantage over similarly rated investment-grade bonds in public markets.
The focus on investment-grade private credit also reflects the evolving nature of the private markets.
Private credit is no longer limited to traditional middle-market direct lending.
The market has expanded to include asset-based finance, structured credit, specialty finance, fund finance and other strategies.
For insurers, these segments can provide different sources of income and risk exposure.
North American Insurers Show Strongest Appetite
The appetite for private credit is particularly strong among insurers in North America.
In the United States, 65% of surveyed insurers plan to increase their allocations to private credit over the next 12 to 24 months.
Demand is even stronger in Canada, where 74% of respondents said they intend to increase allocations.
In Europe, approximately 51% of insurers plan to increase their private credit exposure.
In the United Kingdom, 46% of respondents plan to increase allocations.
The regional differences may reflect variations in insurance regulation, investment practices, market development and the availability of private credit opportunities.
North American insurers have generally been active participants in private markets, supported by the size of the private credit market and the broad range of investment opportunities available to institutional investors.
The survey results suggest that this trend is likely to continue.
Larger Insurers Are More Likely to Increase Allocations
The survey also found that insurer size is a significant factor in private credit allocation plans.
Among insurers with more than $25 billion in assets, 81% plan to increase their exposure to private credit.
That compares with 46% of insurers with less than $25 billion in assets.
Larger insurers often have greater resources to build dedicated private markets teams, conduct due diligence, manage complex portfolios and absorb the operational requirements associated with private investments.
They may also have greater capacity to commit capital to a broader range of strategies and managers.
However, smaller insurers are also showing meaningful interest.
The survey suggests that the gap between larger and smaller institutions may partly reflect differences in internal resources and capabilities rather than a lack of demand.
As private credit continues to mature, smaller insurers may increasingly rely on external managers, investment partnerships and specialized service providers to access the market.
Life Insurers Show Strongest Demand
The survey revealed differences across insurance sectors.
Life insurers were the most likely to plan increased private credit allocations, with 73% of respondents indicating plans to increase exposure.
Health insurers followed at 56%.
Among property and casualty insurers, 40% planned to increase allocations.
The stronger interest among life insurers may reflect the long-term nature of their liabilities.
Life insurers often manage long-duration liabilities and may therefore have greater interest in private credit investments that can provide predictable cash flows and attractive spreads.
Private credit can also offer opportunities to match assets with liability durations.
Health and property and casualty insurers may face different liquidity needs and liability structures, which can influence their ability and willingness to allocate to less liquid investments.
Nevertheless, the survey indicates that private credit remains relevant across multiple segments of the insurance industry.
Insurers Are Increasingly Focused on Risk
Although insurers’ appetite for private credit is growing, the survey shows that investors remain highly aware of the risks associated with the asset class.
The most frequently cited concern was the potential reduction in the illiquidity premium and tighter spreads.
Approximately 66% of respondents identified this as a concern.
The finding highlights the importance of ensuring that investors are adequately compensated for accepting the liquidity constraints associated with private credit.
If spreads tighten too far, investors may question whether the additional return justifies the complexity and illiquidity of the investment.
The second most frequently cited concern was deteriorating underwriting standards or covenants, identified by 54% of respondents.
Another 51% cited concerns about rising defaults, spread deterioration or increased use of payment-in-kind structures.
These concerns reflect the possibility that lending standards could weaken as competition increases and capital continues to flow into the market.
Private credit managers may face pressure to deploy capital, potentially resulting in more aggressive underwriting or weaker covenant protections.
Insurers are therefore increasingly focused on the quality of underwriting and the ability of managers to manage credit risk throughout the investment lifecycle.
Manager Selection Becomes Critical
A disciplined approach to manager selection is becoming increasingly important as insurers expand their private credit allocations.
Amit Popat, Mercer’s Global Head of Financial Institutions, said insurers will need to evaluate managers carefully as the private credit market enters its next phase.
“Capitalizing on the benefits of private credit will require insurers to have a rigorous process for manager selection,” Popat said.
He emphasized the importance of selecting managers with demonstrated capabilities in sourcing, underwriting, portfolio construction and workout management.
These capabilities become particularly important during periods of economic stress.
A manager’s ability to identify opportunities is only one part of the investment process.
The ability to underwrite borrowers, construct diversified portfolios and manage distressed investments can ultimately determine investment outcomes.
Insurers may therefore place greater emphasis on a manager’s track record, operational capabilities, access to proprietary deal flow and ability to manage investments throughout different stages of the credit cycle.
Private Markets Capability Gap Remains
Despite the growing interest in private credit, the survey identified a significant gap between insurers’ investment ambitions and their internal capabilities.
Only 30% of respondents said they have most of the private markets capabilities they need to invest with confidence.
Another 29% said they have only some of the capabilities required.
This gap can limit insurers’ ability to increase allocations effectively.
Private market investing requires specialized skills in areas such as manager evaluation, cash flow modeling, valuation, legal review, portfolio construction, regulatory capital analysis and liquidity management.
Insurers must also maintain ongoing due diligence after an investment has been made.
The need for specialized expertise becomes even more important as portfolios become more diversified across different private credit strategies.
The survey suggests that insurers may increasingly turn to external partnerships to address these capability gaps.
External managers and investment partners can provide access to market expertise, origination capabilities, analytical tools and specialized knowledge.
External Partnerships Can Support Growth
The private credit market is broad and increasingly complex.
No single insurer may have the internal resources required to evaluate every segment of the market.
As a result, investment partnerships can help insurers access opportunities while improving their ability to evaluate risk.
External partners may assist with manager selection, cash flow modeling, capital treatment, liquidity planning and investment execution.
Josh Zwick, a Partner in Oliver Wyman’s Insurance and Asset Management Practice, said insurers of all sizes recognize the need to build capabilities in private markets.
“Even the largest insurers recognize they don’t have all the capabilities or origination capacity in-house and are looking to outside private credit managers to help fill gaps and boost risk-adjusted yields,” Zwick said.
He added that insurers are increasingly looking for partners capable of helping them navigate the complexity of the private credit market.
The growth of partnerships could lead to greater specialization within the market.
Some insurers may focus on direct relationships with managers, while others may use outsourced investment platforms or specialized advisers.
AI Adoption Remains Limited
The survey also examined how insurers are using artificial intelligence in their investment operations.
The results showed that AI adoption remains relatively limited.
More than half of respondents, or 54%, said they are not using AI in a meaningful way.
Only 29% said they use AI to analyze alternative investment data and research.
Potential applications for AI within investment teams include data integration, scenario generation, document review, manager monitoring and risk analysis.
These applications could help investment teams process large volumes of information and improve decision-making.
However, the survey indicates that many insurers have not yet fully integrated AI into their investment processes.
Scale Influences AI Adoption
The use of AI varies significantly according to the size of the insurer’s investment portfolio.
Among organizations managing more than $100 billion in assets, 75% reported meaningful use of AI.
By contrast, only approximately 10% of insurers managing less than $1 billion reported meaningful AI use.
The difference likely reflects disparities in technology budgets, data infrastructure and internal expertise.
Larger insurers are more likely to have the resources necessary to develop or implement advanced AI tools.
Smaller institutions may face challenges related to cost, data availability, cybersecurity and integration with existing systems.
As AI technology becomes more accessible, adoption could increase across the insurance sector.
A More Selective Private Credit Market
The findings of the 2026 Global Insurance Investments Survey suggest that insurers remain highly interested in private credit, but the market is entering a more disciplined phase.
The rapid growth of the asset class has created significant opportunities, but investors are increasingly focused on valuation, underwriting quality, liquidity and manager expertise.
Insurers are showing the strongest interest in investment-grade opportunities and strategies that can provide diversification and attractive risk-adjusted returns.
At the same time, they are increasingly aware that private credit requires specialized capabilities.
The survey highlights a clear need for insurers to strengthen their internal resources or establish relationships with external investment partners.
Private credit is expected to remain an important area of focus for insurance investors over the next several years.
The survey results indicate that a majority of insurers plan to increase allocations, particularly in North America and among larger life insurance companies.
However, future growth will likely depend on maintaining investment discipline.
Concerns about tighter spreads, weaker underwriting standards, rising defaults and liquidity premiums demonstrate that insurers are carefully evaluating the risks of the asset class.
The next phase of private credit growth may therefore be defined less by simply increasing allocations and more by improving the quality of those allocations.
Successful investors will likely focus on experienced managers, strong underwriting, diversified portfolios and robust risk management.
Technology and artificial intelligence may also play an increasingly important role in helping insurers analyze private market opportunities and monitor investment risks.
As insurers continue to expand their presence in private credit, the ability to combine capital, expertise, technology and disciplined investment processes will become increasingly important.
The Marsh survey demonstrates that private credit remains a compelling opportunity for insurers, but it also highlights a central message for the market: growth must be supported by the capabilities necessary to understand, manage and withstand the risks that accompany it.
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