Insurance businesses lose over $1.14m a year to payment fraud

The report warns transaction fraud can escalate into claims fraud if missed early.

Generation “Z” and Millennials are increasingly paying for insurance via mobile devices, creating pressure on insurers still operating on legacy systems that limit payment options, according to findings from the Adyen Index: Singapore Digital Report.

Adyen’s data shows that 27% of insurance businesses globally lose over $1.14m a year to fraudulent transactions, underscoring the importance of balancing fraud prevention with approval rates for legitimate customers.

Adrian Davis, commercial leader for financial services and insurance at Adyen, said many insurers underestimate the impact of payments on business performance, noting that modernising payment processes can help increase sales, lower operating costs and reduce fraud.

According to the report, digital-first insurers are better positioned to meet customer expectations, whilst traditional players face higher costs and slower adaptation due to outdated infrastructure. 

Modernising checkout processes and offering a wider range of payment methods could help insurers improve customer experience and increase conversion rates.

Recurring and subscription-based payments are also highlighted as a growing area of focus. 

Less than 30% of insurance businesses globally currently offer subscription payment models, but 79% plan to invest in them within the next year. 

Failed payments remain a key challenge, often caused by outdated card details, insufficient funds or technical issues, which can lead to policy lapses and involuntary churn.

Adyen’s data shows that 89% of consumers in Singapore abandon an online purchase if their preferred payment method is not available. 

Credit cards remain the most preferred option, cited by 59% of respondents, followed by debit cards at 49% and digital wallets at 48%. 

Adyen says tools such as automated card updates, intelligent payment retries and payment tokenisation can help insurers recover failed payments and reduce manual processing. 

In one example, HDI Seguros increased its authorisation rate from 88% to 91% after implementing Adyen’s Real Time Account Updater and intelligent retry features. 

The insurer recorded a 0.66% rise in approvals, translating to an estimated annual revenue increase of around $226,922.