Insurers are seeking more risk in their investment strategies, says a study commissioned by New York-based investment firm BlackRock Inc.

“Divergent monetary policy is creating a unique set of challenges for global insurers,” says the report, which is based on a survey of 248 senior insurer and reinsurer executives worldwide across all lines of business, conducted in June and July. BlackRock commissioned the study, which was conducted by the Economist Intelligence Unit, part of the London-based Economist Group.

Insurers have seen the positive effects of European quantitative easing, which is a monetary policy where a central bank creates new money electronically to buy financial assets, such as government bonds, says the report. But, “they also fear the market imbalances and unsustainable investment environment it may create,” says the report.

Quantitative easing's impact on asset prices is leading insurers to seek more risk, but they are also “keeping their powder dry” for when quality investment opportunities arise, says the report.

“Almost half of insurers surveyed have made significant changes to investment strategy in light of (quantitative easing) and monetary policy, with asset prices and economic growth expected to be positively impacted in the short term,” while a similar number plan to make changes in the coming year to two years, “a trend most pronounced among North American insurers,” says the report.

However, divergent monetary policy and quantitative easing's potential long-term effects worry insurers, with just under half of the insurers surveyed citing the low interest rate environment as a major market risk, the report says.

The report says more than half of insurers are planning to raise their risk exposure over the next 12 to 24 months in search of higher yield, compared to just a third in last year's survey

Insurers are also changing the composition of their risk assets, with equities to be given a smaller allocation “as insurers reposition their risk exposure to generate income,” the report says.