Asia-Pacific insurers face $200b legacy tech burden

Outdated tech and entrenched processes continue to hamper operations.

Asia-Pacific (APAC) insurers risk falling behind digital competitors if they continue relying on legacy technology, which limits their ability to respond to customer demands and global risks, analysts said.

“Insurance is a ‘sleep-at-night’ solution,” Simon Smallcombe, Asia-Pacific insurance partner at The Capital Markets Company NV (Capco), told Insurance Asia. “Interactions with insurers are much less frequent, and there has been a lag in modernisation and investment,” he said by phone.

But insurers have been rapidly catching up, he said, citing significant investment in tech for claim optimisation, digital tools at the point of sale, financial need analysis, product recommendations, and transformation.

A 2025 HFS Research Ltd. report estimates that insurers in the region carry $200b in technical and process debt: $134 billion tied to legacy systems and $66 billion to outdated processes, largely concentrated in claims handling.

The study found that consumers increasingly benchmark insurers against banks, expecting fast, seamless digital experiences.

Clearwater Analytics Holdings, Inc. reported that 75% of insurers focus heavily on immediate operational challenges rather than long-term transformation; among the biggest firms, that rises to 90%. “Some of these companies are well over 100 years old, and there are entrenched ways of doing things,” Shane Akeroyd, Clearwater’s APAC chief, said by telephone.

Despite these obstacles, insurers are investing heavily. Smallcombe cited AIA Group Ltd. and Prudential Plc, which have each invested about $1b in technology, data, and analytics over the past five years.

These investments cover digital tools at the point of sale, claim optimisation, product recommendations, workflow automation, and transformation programs.

Yet significant spending does not automatically yield results. Many insurers have focused on digitising front-end journeys whilst leaving core systems intact. Innovation requires more than updating interfaces, said Ryan Kim, chief technology and digital officer at FWD Group Holdings Ltd. “It demands agile governance, cross-functional ownership, and the willingness to retire or reinvent legacy processes.”

Generative artificial intelligence (AI) has become increasingly central to operations. FWD’s AI-powered underwriting system in Japan cut processing times by 30%, whilst Clearwater reported that 92% of reconciliation tasks now use AI, improving speed and accuracy.

The sector also faces a looming talent crunch. Many experts who maintain legacy platforms are retiring, creating gaps in institutional knowledge.

“Finding new entrants skilled in some of these older technologies, by definition, is going to become tougher over time,” Akeroyd said. 

“Those who knew how to work on legacy systems are leaving. They’re older, in their 50s and 60s,” he added.

Insurance executives said modernisation is no longer optional. Rising customer expectations, digital competition, and regulatory pressures demand both technological upgrades and process reinvention.

“The narrative seems to have shifted from innovation, like buying new things, to execution or making them work at scale,” Akeroyd said.