KUALA LUMPUR: The insurance industry in Malaysia is rapidly shifting towards a connected ecosystem, which will take time, according to 70% of insurance companies that were recently surveyed.
At the same time, global financial technology platform Adyen reported, in its Adyen Insurance Report 2026 (Malaysia) findings, that 51% of consumers said customer service quality shaped how they chose their insurance providers.
Another 39% agreed that brand reputation mattered.
The survey was done with 2,001 insured consumers and 200 insurance decision-makers across large-scale and mid-market insurers in the country.
With the use of big data and artificial intelligence cropping up in various industries, Adyen Malaysia country manager Lee Soon Yean said while the insurance industry has always been seen as traditional, he sees the rise of digital insurance as technology evolves.
“There are no agents in digital insurance products, but there is artificial intelligence (AI). At the same time, there are no legacy burdens because they are brand new, unlike traditional insurance products,” he told StarBiz.
Lee was referring to 74% of insurers that said they expect to achieve end-to-end customer journey visibility by 2030 – signalling a move away from fragmented systems towards a data-led operation.
Legacy issues, he said, meant old systems that have outgrown their life span.
“Digital insurance is not necessarily the answer to the gaps in traditional insurance, because they cater to different demographics and consumers.
“A person might go to a more seasoned insurance company for life and medical coverage, while some might go to a digital insurance company to buy one-offs, like travel or car insurance,” he explained.
He said the insurance industry in Malaysia is a very large market compared to many other countries. “This could be because in other countries, the government support is much better, so the need to buy with larger premiums is less.
“Here in Malaysia, we see that insurance is very important for the masses,” he opined.
Meanwhile, the survey highlighted three key findings, including consumer expectations that have exposed operational gaps in the industry such as system failures, and the solutions needed to counter those failures.
Lee said 61% of the surveyed insurers still dedicate a significant amount of resources to manually process claims. In addition to that, 80% of insurers are still issuing claim payouts through cheques.
“To counter that, 67% of insurers are working towards digitalising and streamlining payment systems, while 69% are working towards automating payment-related processes,” he noted.
The gap, he said, was most visible in payments – which was the second key finding.
The survey revealed a significant challenge was associated with recurring payments and failed transactions.
Lee explained there was a risk of involuntary churn, because this exacerbates the reliance on manual work which then drives up operational costs for insurance companies.
It could also cause significant stress and worry for a consumer who may need to be hospitalised, but is unable do so because there might have been a lapsed payment in their policy.
