Hong Kong Insurers Face Customer Loss Over Outdated Fraud Tools

Mashrukh Khan: Hong Kong insurers are finding themselves increasingly exposed as fraud eats away at their bottom lines, while outdated payment systems and lingering reliance on cheques continue to slow everything down and frustrate customers. According to a recent report highlighted by Adyen, fraud is costing some companies as much as 5 percent of their annual revenue, with many executives pointing directly at legacy technology as a major culprit that not only hampers fraud detection but also drags out claims processing and everyday transactions.

Todd McGregor, who serves as market lead for Asia-Pacific, India, the Middle East, and Africa at Celent, recently shared his observations during a conversation with Insurance Asia. He noted that while progress in digital transformation has been noticeable among the leading players, it remains strikingly uneven across the sector. “The leading insurers have markedly improved their onboarding, servicing, and claims experiences,” he explained, “but many still fall short of what customers now expect in terms of real-time, seamless interactions.” This gap becomes especially apparent when policyholders compare their insurance journeys to the instant gratification they get from ride-hailing apps or online shopping platforms.

Kai Tang, head of Adyen Hong Kong, echoed similar sentiments in a separate discussion, stressing that younger generations, particularly Gen Z customers, demand the same level of mobile-first convenience no matter the industry. “It’s no longer just about the product they’re selling, but really about the experience,” Tang pointed out. Adyen’s findings back this up, revealing that 41 percent of Hong Kong consumers rank customer experience as a top priority when choosing or sticking with an insurer, often benchmarking them against purely digital services rather than just competitors within the insurance space.

The fraud problem adds another layer of urgency. Adyen’s research shows that 74 percent of Hong Kong insurers believe fraud is costing them up to 5 percent of revenue, while 55 percent admit that their outdated payment infrastructure actively limits their ability to spot and stop suspicious activity in real time. More than half of these companies still pour significant resources into manual processing, and a staggering 96 percent continue issuing cheques for certain payments, a practice that feels increasingly archaic in today’s fast-paced environment.

McGregor highlighted how many insurers are attempting to patch these issues without undertaking full-scale replacements of their core systems, which often date back a decade or more. Instead, they’re layering on orchestration tools that connect different platforms. Yet he cautioned that these aging core systems—responsible for everything from underwriting and claims handling to policy administration and customer service—remain the biggest roadblock to genuine digital sophistication. “If you’re sitting on a 10-year-old core system, then anything sophisticated you try to do digitally becomes very difficult,” he observed.

This situation aligns closely with broader industry outlooks. Deloitte’s 2026 Global Insurance Outlook, for instance, flags core system modernization and greater adoption of artificial intelligence as key investment priorities for driving efficiency and sustainable growth. McGregor added that insurers have traditionally lagged behind banks when it comes to pouring money into customer-facing technology, though that trend is gradually shifting as competitive pressures mount. The strongest performers are already reaping benefits through self-service portals, mobile apps, AI-powered support, and streamlined claims processes that make life easier for policyholders.

On the fraud front, both executives see automation as a powerful ally. Tang emphasized that smarter systems could dramatically speed up claims reviews while simultaneously strengthening defenses against bad actors. Adyen’s data offers some optimism here: 92 percent of Millennials indicated they would happily accept two-factor authentication if it led to a noticeably faster overall experience. Looking ahead, 54 percent of insurers plan to roll out tools by 2030 that provide end-to-end visibility into customer journeys, along with deeper API integrations that tie everything together more effectively.

Ultimately, McGregor and Tang agreed that the insurers best positioned for success will be those that manage to unify payments, fraud prevention, customer data, and engagement into a single, cohesive platform. In a market where digital expectations keep climbing and customers are quicker than ever to switch providers, clinging to manual processes and outdated technology is no longer a viable long-term strategy. Hong Kong’s insurers face a clear choice: modernize decisively or risk watching tech-savvy newcomers capture more of the market share. The window for meaningful change is open, but it may not stay that way indefinitely.