Insurers in Southeast Asia lose millions via outdated systems
Southeast Asia’s insurers may be leaving millions of dollars in unclaimed reinsurance recoveries, according to Christian Erickson, managing director for APAC at Duck Creek Technologies. The issue, he says, is not with reinsurance itself, but with the outdated methods insurers use to manage it.
Legacy systems no longer fit for purpose
Erickson argues that while the core mechanics of ceded reinsurance administration remain stable, the surrounding environment has shifted. Southeast Asia’s insurance market has undergone significant changes, with increased pressure on ceding insurers. Legacy methods, such as spreadsheets, are no longer adequate.
Insurers that have adopted modern reinsurance management platforms have identified significant volumes of missed recoveries, potentially worth millions of dollars per year. The implementation cost of these new systems is often offset almost immediately. Duck Creek’s customers that retrospectively reviewed their reinsurance activities using their new reinsurance management solution identified significant volumes of missed recoveries that they had been able to claim, potentially missing out on millions of dollars of recoveries per year.
Market variations and regulatory changes
Erickson distinguishes between Southeast Asian markets, noting that Singapore faces different pressures than its neighbors. Singapore’s insurers, strongly connected to international reinsurance markets like Lloyd’s, can unlock more value from their existing programs with new technology.
In contrast, Thailand and Malaysia are growing markets exposed to catastrophe events. Legacy methods have prevented insurers in these countries from accessing favorable reinsurance contracts, leading to tighter risk selection, higher premiums, and poorer customer outcomes. Both markets have recently been exposed to catastrophe events, a pattern that shows little sign of reversing.
Malaysia is undergoing a significant regulatory transition, with Bank Negara Malaysia pushing for greater market penetration and modernisation. Ceded reinsurance sits directly in the path of these changes, supporting capital management while finance teams work to meet new reporting and accounting requirements.
The AI problem nobody is talking about
AI has arrived in the reinsurance conversation whether insurers are ready for it or not. However, Erickson points out that most of the AI activity he is currently observing in the region is being layered on top of precisely the legacy systems it should be replacing. “What we’re beginning to see is institutions applying AI tools to legacy methods,” he said. “Doing so may give them short-term benefits, but this adds long-term complexity, costs and limitations.”
When AI is applied to a fundamentally flawed system, it does not fix the flaws – it embeds them. “The inherent flaws of the legacy solution get locked in and AI acts as a band aid,” Erickson said. “The AI also adds a layer of technological and functional complexity, another layer that can fail. By not replacing legacy solutions, insurers are not obtaining the maximum long-term value of a modernisation programme.”
For insurers already on modern platforms, by contrast, AI opens up genuinely useful applications. Erickson pointed to use cases including deeper insights to maximise recoverables, stronger contract negotiation support, capital unlocking and improved rates. “But with many insurers still using antiquated legacy reinsurance management methods,” he added, “the biggest push is to get them on to modern reinsurance management solutions, from which they can achieve almost immediate ROI and then build an AI strategy to drive further business value.”
The path forward for regional markets
For non-life insurers in the region, the question is no longer about adequacy. It is about the cost of staying behind. Once installed, these platforms allow insurers to identify missed recoveries and improve their overall management. The gap between Southeast Asian and global practices will likely widen if the region does not act. The limitations of legacy methods are going to become even more obvious in the future. Regulatory, customer, economic, and operational factors are driving the need for more capable management methods.
The problem is only going to get bigger and more visible. Reinsurance is no longer just about mitigating an insurer’s risk.
