Clearwater Analytics (NYSE: CWAN), the most comprehensive technology platform for investment management, recently released industry research revealing that US insurers are quietly stepping up their FX protection strategies as fresh volatility ripples through markets.
Clearwater Analytics data shows that net purchases of forward dollar contracts by insurers have jumped sharply this year, even though the dollar index has fallen by only about 2 per cent year to date. Despite its modest fall, activity in forward contracts has surged, with insurers increasing net purchases of dollar hedges to levels not seen since late 2025. Gross activity is elevated on both sides, with buying and selling volumes exceeding records last set during “Liberation Day” volatility in April 2025.
Matthew Vegari, Head of Research at Clearwater Analytics, said the spike in activity reflects a shift in how asset owners respond to turning points in markets rather than simple rises or falls. “It’s not just dollar weakness that drives hedging,” he said. “Insurers tend to react when the path of the currency becomes less clear and volatility picks up.”
Forward contracts, which allow investors to lock in exchange rates in advance, are designed to help protect overseas investments from currency swings. Clearwater’s latest findings show hedging demand rising both when the dollar drops and when it rallies, highlighting a more defensive approach among large institutional portfolios.
“For FX markets, the trend offers a reminder that beneath relatively calm headline moves, risk managers may already be positioning for a more unpredictable phase in the dollar cycle,” Vegari concluded.
More info at the Clearwater blog here.
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