As digital convenience becomes the norm across banking, e-commerce, and other industries, insurers have a growing opportunity to modernise legacy systems and create faster, more seamless customer journeys. While customer expectations continue to evolve, many insurers are now investing in digital transformation initiatives that streamline operations, improve efficiency, and enhance overall customer satisfaction.

According to Adyen Insurance Report 2026 (Malaysia), customer service quality has emerged as the top factor influencing insurance decisions among Malaysians, cited by 51% of respondents, followed by brand reputation at 39%.

The report, based on research conducted by Censuswide among 2,001 insured consumers and 200 insurance decision-makers from large-scale and mid-market insurers in Malaysia, highlights how customer experience is increasingly becoming a key competitive differentiator in the insurance sector.

“Consumers today expect insurance interactions to be seamless, dependable, and consistent across every touchpoint, from onboarding and payments to claims processing,” said Lee Soon Yean, Country Manager, Adyen, Malaysia.

While consumer trust in insurers remains strong, with more than 80% expressing confidence in the fairness and consistency of fraud checks, there is still room for insurers to further enhance operational efficiency and customer experience.

Legacy systems continue to hold insurers back

The study found that many Malaysian insurers still rely heavily on manual processes, particularly in claims and payment management. About 61% of insurers surveyed continue to dedicate substantial resources to manually processing claims.

Encouragingly, insurers are beginning to respond. Around 67% of insurers surveyed said they are working towards digitising and streamlining payment systems, while 69% are focusing on automating payment-related processes.

The payment experience, in particular, has become a critical touchpoint. Failed or delayed transactions can result in missed renewals, frustration, and even loss of trust, regardless of the quality of the insurance product itself.

Limited payment visibility creates operational challenges

Recurring payments such as insurance premiums remain one of the industry’s biggest operational pain points.

Traditionally, insurers only become aware of failed transactions after receiving delayed batch updates from banks, often without clear explanations for why payments were declined. This lack of real-time visibility forces insurers to manually intervene in recovery processes, increasing operational costs and contributing to involuntary customer churn.

“When insurers don’t have real-time insight into payment performance, issues take longer to identify and resolve,” Lee explained. “With the right payments partner, insurers can reduce manual work, ensure uninterrupted insurance coverage, and ultimately improve customer retention.”

How Adyen supports the insurance industry

Adyen supports insurers through a single financial technology platform that combines payments capabilities, data insights, and financial products to help simplify operations and improve customer experiences.

By consolidating payments onto a single platform, insurers can reduce integration and reconciliation complexity across teams while gaining greater visibility into payment performance and customer journeys.

Connected systems also enable connected data. Payment data can help insurers better understand areas such as payment performance and authorisation trends, while supporting faster issue resolution and operational decision-making.

A key cause of failed recurring payments is lost, stolen, or expired cards. To address this, card schemes introduced Real Account Updater services that allow businesses and acquirers to replace invalid card details with updated information.

Fraud concerns continue to complicate digital transformation

Fraud remains another major challenge for insurers attempting to balance security with customer convenience.

The report estimates that 24% of insurance claims may involve some form of fraud, while 46% of Malaysian insurers believe fraud accounts for up to 3% of their annual revenue losses.

Although artificial intelligence is increasingly recognised as an important tool in fraud detection, adoption across the industry remains uneven. Only 39% of insurers currently use AI-driven fraud detection tools, while 61% believe the cost of implementing next-generation AI solutions outweighs the efficiency gains.

At the same time, 66% of insurers acknowledge that investing in AI is necessary to stay ahead of evolving threats.

Towards a more connected insurance ecosystem

As customer expectations evolve, insurers are increasingly being compared to digital-first industries where speed, simplicity, and transparency are standard.

This is driving the industry towards more integrated ecosystems where payments, customer data, and operational processes are connected across the entire insurance journey.

According to the report, 74% of insurers expect to achieve end-to-end customer journey visibility by 2030, reflecting a broader shift away from fragmented systems towards unified, data-driven operations.

As Malaysians place greater emphasis on convenience, trust, and digital efficiency, insurers that successfully modernise payment systems, reduce operational friction, and improve customer experiences are likely to be better positioned to retain customers and remain competitive in an increasingly digital marketplace.