How can Hong Kong insurers close protection gaps as cyber risks rise?

Most insurers still use cheques for some payments despite digital demand.

Hong Kong insurers face rising pressure to modernise payment systems and cyber protection as consumers demand faster digital services whilst businesses remain exposed to mounting artificial intelligence (AI)-driven and supplier-linked cyber risks.

In a report, Netherlands-based financial technology company Adyen N.V. said Hong Kong consumers increasingly expect insurers to match the seamless digital experience offered by e-commerce and ride-hailing platforms, with 41% now prioritising customer experience when dealing with insurers.

“Consumers today are not just comparing their insurer to other insurers; they are also benchmarking them against their favourite e-commerce platforms and ride-hailing apps,” Kai Tang, head of Hong Kong at Adyen, said in the report. “They expect to pay their premiums with a single click and manage their policies effortlessly.”

The report, based on a survey of 2,000 Hong Kong consumers and 204 senior insurance leaders, found that outdated systems continue to slow onboarding, premium collection, and claim processing.

More than half of insurers said they still spend significant resources on manual processing, whilst 96% continue to use older payment methods such as cheques for some transactions.

Half of insurers surveyed said demand for instant and seamless services would become a major competitive challenge over the next five years.

Fraud is adding further strain. Adyen said 74% of insurers reported fraud costs of as much as 5% of annual revenue, though tighter fraud controls could also slow legitimate transactions.

Adyen found that 92% of Millennials would accept two-factor authentication if it improved transaction speed and convenience. Despite growing fraud risks, only 28% of insurers use AI-based fraud detection tools, whilst 52% remain hesitant because of the perceived cost of adopting AI systems.

A separate survey by QBE Insurance Group Ltd. found Hong Kong businesses are more optimistic about AI adoption than the global average, though many remain vulnerable to cyberthreats through suppliers and business partners.

“Companies can no longer be solely concerned with their own cyber defences,” Sam Russell-Vick, regional cyber lead at QBE Asia, said in a report. “They must now consider the cyber vulnerabilities of their suppliers, as perpetrators exploit weaknesses that arise with such partnerships.”

QBE found 96% of Hong Kong business and technology leaders expect AI to have a positive business impact over the next two years, compared with 92% globally. About 81% of businesses are already using AI, whilst 17% are considering adoption.

Operational efficiency was the main reason for AI adoption, cited by 56% of respondents, followed by productivity gains at 51%, improved agility at 43%, innovation at 38%, competitive advantage at 38%, and revenue growth at 26%.

Cyber exposure remains significant. QBE found 59% of Hong Kong businesses experienced at least one cyber event in the past year, whilst 18% of affected companies suffered one or more days of business interruption. Despite those risks, 22% of Hong Kong companies with 100 to 2,000 employees still don’t carry cyber insurance.

Questions to ponder: