Cheques and manual work persist as fraud costs reach up to 5% of revenue.

Hong Kong insurers risk losing customers to digital-first rivals unless they modernise ageing technology that slows service, weakens fraud detection, and limits automation.

“Progress has been good, but it's been uneven amongst the different insurers,” Todd McGregor, market lead for Asia-Pacific and India, the Middle East, and Africa at Celent LLC, told Insurance Asia.

“The leading insurers, their onboarding process, their servicing and claim experiences have been markedly improving... but many of them are still falling short in terms of customer expectations for real-time interactions,” he said via Zoom.

Adyen N.V. in a report said 41% of Hong Kong consumers prioritise customer experience when dealing with insurers, comparing them not only with other insurers but also with digital services.

Kai Tang, head of Adyen Hong Kong, said Gen Z customers expect insurers to deliver the same mobile experience as e-commerce and ride-hailing apps.

“They expect the same across different industries,” he said in a separate Zoom call. “It's no longer just a case of the product they're selling, but it's really about the experience.”

Fraud is also becoming more costly. Adyen found 74% of Hong Kong insurers estimate fraud costs them as much as 5% of annual revenue, whilst 55% said outdated payment systems limit their ability to detect fraud effectively.

More than half still dedicate resources to manual processing, and 96% continue to use cheques for certain payments.

McGregor said many insurers are trying to improve digital services without replacing their ageing core systems.

He said organisations are increasingly choosing to keep their core systems and add an orchestration layer that links them together instead of undertaking large-scale system replacements.

He added that core systems remain the biggest obstacle because they support underwriting, claims, policy administration, distribution, and customer service.

“If you're sitting on a 10-year-old core system, then anything you try and do of a sophisticated nature digitally is just difficult,” McGregor said.

The industry's priorities align with findings from Deloitte LLP's 2026 Global Insurance Outlook, which identified core system upgrades and artificial intelligence (AI) adoption as leading investment areas to improve efficiency and growth.

McGregor said insurers have historically invested less than banks in customer-facing technology, but that is beginning to change.

“The best insurers have spent time, effort, and money on digitising the onboarding and servicing journeys,” he said, citing self-service tools, mobile services, AI-assisted support, and simpler claim processing.

Tang said automation could also reduce fraud and speed up claim reviews.

Adyen found 92% of Millennials would accept two-factor authentication if it resulted in a faster experience, whilst 54% of insurers expect to introduce tools that track customer interactions across the entire insurance process and application programming interface integrations by 2030.

Both executives said insurers that combine payments, fraud prevention, customer data, and customer engagement into a single platform would be better placed to compete as digital expectations continue to rise.