Employers cut insurance benefits as costs reshape strategies across APAC

Looking ahead, 33% of organisations plan to enhance outpatient insurance.

Employers across Asia are cutting back on insurance benefits as budget pressures mount, according to the Asia Employee Benefits Report 2025 by the Chartered Institute of Personnel and Development (CIPD) and AIA.

The survey found that life and accident insurance remains the most provided benefit at 50%, followed by hospitalisation and surgical cover at 42% and outpatient insurance at 40%. 

All three have declined from 2024, when provision stood at 55%, 50% and 52% respectively. 

CIPD said rising costs, particularly medical inflation, which has doubled between 2020 and 2024, are driving these cutbacks.

Despite the pullback, AIA data shows overall coverage has improved over time, with Group Term Life and inpatient limits increasing annually by up to 11% and 6% since 2019. 

Critical illness and outpatient coverage have also expanded across Singapore, Malaysia and Hong Kong.

Looking ahead, 33% of organisations plan to enhance outpatient insurance, 27% aim to expand mental health benefits, and 21% expect to improve life or accident insurance. 

Health and wellbeing support, training and career development, and flexible work are also expected to grow in importance.

The report highlights that nearly half of firms see rising costs as the top factor shaping their benefits strategies, whilst 44% say understanding employee expectations remains a challenge. 

Yet only 26% actively gather staff feedback when designing benefits packages.