Fast payouts and seamless digital experiences have emerged as key requirements for insurance customers in Hong Kong. At the same time, fraud is becoming increasingly sophisticated, demanding insurers to adopt advanced technologies including artificial intelligence (AI) to stay ahead of evolving threats all the while ensuring a seamless experience.

These insights come from a new report by Dutch payment firm Adyen. Released in May 2026, the report draws on a poll of 2,000 Hong Kong consumers and 204 senior insurance leaders, to identity key trends in the insurance industry in Hong Kong, highlighting shifting behaviors and critical gaps in the local sector’s transformation, and emphasizing how legacy systems continue to create friction in the customer journey.

The impact of slow payouts

In Hong Kong, most insurers have an average payout speed of between 30 and 60 days, a delay which can create severe financial strain and which can lead to provider switching. 33% of the Hong Kong consumers polled by Adyen said they have gone into debt because of slow payouts. Additionally, 52% of the insurers surveyed identified slow payouts as a primary driver of customer churn.

Looking ahead, 50% of insurers agreed that customer demand for instant claim payouts will be one of their top three competitive challenges in the next five years. For now, the main blocker is fraud prevention. 55% of insurers said they are likely to adopt instant claim payouts by 2030 if fraud is brought under control.

Lagging customer payment experiences

Customers are increasingly benchmarking insurer payment experiences against the high standards set by the retail sector. This sector offers instant, flexible options like digital wallets, and is ranked as the top industry leading the way in online payments, far ahead of insurance.

96% of insurers still rely on cheques, with many depending on manual processing methods. This operational inefficiency is costly, with 55% of insurers dedicating significant resources to manually process payouts.

Convenience as a new measure of value

While price remains a key factor, younger generations, particularly Gen Z and Millennials, are prioritizing the speed and seamlessness of payouts.

When choosing an insurers, respondents cited the top factors as the premium price (50%), brand reputation (46%), the speed of claim payouts (41%), and customer service quality (37%). Emerging as critical differentiators are payout methods (20%), and digital experience (17%), reflecting growing demand for frictionless and convenient digital interactions.

The cost of fraud

Fraud remains a major drain on insurersʼ profitability and efficiency. 74% of insurers in Hong Kong estimate that up to 24% of insurance claims involve some form of fraud, with the typical cost of a fraudulent claim ranging from HKD 525,000 (US$67,000) to HKD 1 million (US$128,000).

Each suspicious claim triggers manual reviews, tying up valuable resources and delaying legitimate payouts. Consequently, for 74% of insurers, fraud costs them up to 5% of their revenue.

This burden extends to customers as well as high fraud rates are factored into premiums. This means that honest customers ultimately feel the impact too.

Smarter fraud prevention

But rising fraudulent activity doesn’t justify overly cautious security measures. In fact, excessive controls often backfire, slowing down payouts and driving customers away. 57% of insurers reported that current fraud controls are actively hampering the transition to instant payouts.

The solution is not to tighten every control, but to modernize them to prevent fraud before it occurs. AI will play a pivotal role in this strategy, allowing insurers to protect revenue while enabling frictionless claim settlements. Recognizing this, 51% of insurers realize they must invest in AI to stay ahead of evolving threats.

This investment is critical as fraud itself becomes more sophisticated. 54% of insurers reported that fraudstersʼ use of AI has made attacks harder to prevent.

The burden of legacy systems

The study found that while legacy systems continue to limit the industry’s ability to meet changing customer expectations, progress is underway, and the industry is moving towards automation and digitalisation.

50% of insurers expect that their organizations will soon be able to digitalize and streamline their payment systems, and 52% believe theyʼll soon automatically adjust payments for policies, renewals, or claims.

Rethinking money movement

The research also found that the next phase of digital transformation in insurance won’t be just about speed, but will also involve smarter money movement. By linking every stage of the payment flow, from collection to payout, insurers will gain greater visibility, flexibility, and control.

Looking ahead to 2030, 54% of insurers intend to implement end-to-end customer journey visibility, and 54% of insurers plan to implement API integrations with ecosystem partners.

This integrated approach will enable insurers to settle legitimate claims instantly while maintaining strong fraud controls, automate reconciliation and cash flow management, and use payment data to anticipate needs, prevent fraud, and build deeper customer relationships.

Hong Kong’s insurtech initiatives

Hong Kong has the highest insurance density in Asia and the second highest globally at over US$8,700 per capita, and an insurance penetration rate of 18.2%, the highest in the world. The government is actively reinforcing this status by championing insurtech adoption.

Since introducing the Fast Track licensing framework for virtual insurers in 2017, the Insurance Authority (IA) has authorized four digital insurers: two in life and two in non-life business. Complementing this, the Insurtech Sandbox has approved more than 40 applications to date, allowing the regulator to test bold ideas in a safe environment, gather real-world evidence, and refine regulation in step with innovation.

Hong Kong is also driving the development of open ecosystems. The IA is working closely with the industry on more than 30 open API use cases spanning the entire insurance value chain. These APIs are designed to  foster interoperability, laying the foundation for a connected insurance marketplace that benefits both consumers and distributors.

These efforts have yielded remarkable growth. According to a 2025 study by the Hong Kong Monetary Authority, insurtech adoption among institutions with insurance licences increased from 28% to 57%, which represents the most substantial growth percentage since the 2022 assessment.

AI adoption is particularly robust, with 20% of insurers having already formulated formal AI strategies and actively implementing solutions, according to a 2025 study by the IA. Over half of them are in exploratory or pilot phases, while 40% plan to increase investment over the next two years.

Featured image: Edited by Fintech News Hong Kong, based on images by user17364411 and user850788 via Magnific