Non-life insurers told to upgrade tech to drive growth

It could help the industry ride market trends and mitigate risks.

Property and casualty insurers should harness technology to cut costs, improve underwriting capabilities, and enhance customer experience as they brace for heightened risks from cybercrimes and natural disasters, analysts said.

The digital push would remain a key trend in the insurance sector in the next five years as consumers demand simpler and faster ways to buy insurance policies and file claims, they added.

“On the technology side, it is super important to see the changes coming,” Henrik Naujoks, head of financial services in Asia-Pacific at Bain & Co., told Insurance Asia. “A lot of our discussions with clients are centred around the tech changes that we have to embrace to benefit from some of these market trends, or to mitigate some of the risks.”

Analysts have identified more frequent and stronger natural catastrophes as an emerging risk in the property and casualty sector for 2025. Extreme weather risks have fuelled some of the catastrophic events this year and would remain a top risk to monitor, Naujoks said.

In November, Charles Taylor Insurance Services Ltd. expanded its Malaysian operations, citing the country's growing loss-adjusting industry, driven in part by the rising frequency of natural disasters.

The Asia Pacific region is highly vulnerable to natural disasters, with rapidly urbanising areas contributing to higher losses in high-risk areas, according to reinsurance broker Gallagher Re.

An unusual risk Naujoks highlighted for 2025 is the potential for armed conflict due to escalating global geopolitical tensions. He also cited misinformation, disinformation, and civil unrest as growing societal risks, particularly during elections, which often suffer from foreign interference.

Reinsurers should develop innovative solutions for these types of risks, which may not be directly insurable, Naujoks said. 

Generative artificial intelligence (genAI) is another area that insurers could exploit to improve operations. Bain & Co. in an October 2024 report detailed several initiatives, including Zurich’s use of six years of claim data to improve underwriting and a South American insurer's deployment of AI-powered tools such as automated claim summaries and chatbots.

These initiatives have shown promising results, including a 50% productivity boost in specific tasks, a potential 40% reduction in claim leakage, and time savings of 10 to 20 minutes per claim through AI-assisted coverage validation.

‘Real art’
GenAI could create personalised risk reports and pre-underwritten insurance offers based on available data, Bernhard Kotanko, a senior partner at McKinsey & Company, said in a video interview.

Naujoks said the hype around AI is fading as insurers face more serious challenges. Many are now focused on achieving tangible bottom-line impacts from their AI investments rather than identifying new use cases, he added.

“This is a pattern we’ve seen before with technological advances — people focus on the technology itself, but making it work effectively is the real art,” he said. Insurers also often overestimate AI's short-term impact whilst underestimating its long-term potential, leading to unmet expectations.

Cybersecurity risks are another concern, particularly with the rise of deepfake technology. A November 2024 report by identity verification platform Sumsub showed that deepfake fraud in the Asia-Pacific region almost tripled.

A recent Cybersecurity Insiders report showed that 83% of organisations worldwide experienced at least one insider attack in the past year. Naujoks said this could become a multi-year trend as malicious actors increasingly adopt advanced technologies.

AI frameworks should include accountability, compliance, and human oversight, he said. “The insurance industry is heavily regulated, so there is a much higher threshold for risk management compared with the consumer product industry.”

Bala Subramaniam, managing director at Charles Taylor Malaysia, noted that whilst many fear AI would replace jobs, this is unlikely to occur in the next 10 to 15 years. “It’s not so much about what AI can do, but looking at what areas we can work together with AI to complement each other.”

Meanwhile, Kotanko said there is potential in nonmotor and commercial insurance in countries like Indonesia, Malaysia, Thailand, Vietnam, and India, where liability insurance remains underdeveloped.

"When you ask who has personal liability insurance, it's actually astonishing how few people have it,” he said. “It's whole sectors that are not yet developed.” Insurers, he added, should explore these sectors with entrepreneurial boldness, supported by regulatory stability, reliable governance, and legal protection.