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Legacy Technology Still Constrains APAC Insurers
Despite widespread confidence in their digital transformation efforts, insurers across the Asia-Pacific (APAC) region remain heavily constrained by outdated technology, according to new research by Clearwater Analytics (NYSE: CWAN), a leading investment management technology platform.
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The study reveals a striking contradiction: while 87% of APAC insurers believe they are digitally ahead of competitors, an overwhelming 93% admit that legacy systems are restricting business growth and shaping future strategy. The surveyed firms collectively manage $3.8 trillion in assets under management (AUM).
Bigger Firms, Bigger Technology Challenges
The findings show that the challenge intensifies as organisations grow larger. Among insurers managing between $1 billion and $5 billion, 90% say legacy technology constrains growth. This figure rises sharply to 97% among insurers with AUM of $50 billion or more.
This dependence on ageing systems is also influencing strategic direction, forcing insurers to prioritise maintaining outdated infrastructure rather than investing in innovation and long-term competitiveness.
Short-Term Focus Undermines Long-Term Strategy
Nearly 73% of respondents said their organisations are overly focused on short-term operational issues instead of long-term strategic challenges. The misalignment is most pronounced among large insurers, where 90% of executives at the biggest firms acknowledged the issue, compared to 67% at smaller firms.
This short-term bias raises concerns about the sector’s readiness to adapt to rapid technological change, regulatory pressures, and evolving customer expectations.
Talent Shortages Expose Legacy System Risks
Recruiting talent capable of managing ageing systems is becoming increasingly difficult. More than half of respondents (54%) described hiring for legacy technology roles as a growing problem, with 15% calling it a serious challenge. Only two executives surveyed said it was not an issue.
The problem is most acute at scale:
- 26% of small firms flagged recruitment challenges
- 86% of large firms said legacy system skills shortages were a major concern
Looking ahead, 75% of executives expect these hiring challenges to worsen over the next five years, threatening operational continuity.
Cultural Resistance Slows Digital Transformation
Technology challenges are compounded by deep-rooted organisational resistance. An overwhelming 95% of respondents said employees in the insurance sector resist change and the adoption of new operating models and systems.
Only 5% said resistance to change was not a concern, highlighting how cultural barriers remain one of the biggest obstacles to meaningful digital transformation.
Workforce Diversity Linked to Innovation Gaps
The study also points to workforce diversity as a critical factor. 59% of executives said the industry’s problems stem from a lack of diversity—not just in background, but in thinking and perspectives.
However, opinions vary widely, revealing a leadership disconnect:
- Managers: 74% see diversity as a problem vs 48% of C-level executives
- Life and general insurers: 75% vs 28% of third-party managers
- Largest firms: 79% vs 56% of smaller firms
These gaps suggest misalignment between leadership perception and operational realities on the ground.
Confidence Persists Despite Operational Constraints
In contrast to concerns around legacy systems and culture, most insurers remain confident about their competitive positioning:
- 87% believe they are ahead of competitors in digital transformation
- 19% say they are significantly ahead
- Only 1% believe they are trailing competitors
Similarly, 89% of respondents said their operating models are flexible and scalable enough to meet future challenges, even as 96% expect increased mergers and acquisitions (M&A) across the sector.
Risk of Falling Behind in a Consolidating Market
Commenting on the findings, Shane Akeroyd, Chief Strategy Officer and President, Asia Pacific at Clearwater Analytics, warned of a widening gap between perception and reality.
“While APAC insurers show confidence in their digital progress, our research reveals a concerning gap between perception and operational reality that could impact competitive positioning as the sector consolidates,” Akeroyd said.
He added that reliance on older technology stacks is undermining long-term capability and confidence, stressing that digital transformation requires cultural change as much as new technology.
With consolidation accelerating, insurers that fail to modernise their operating models risk discovering that their perceived flexibility and scalability do not hold up under pressure—potentially eroding their competitive advantage.
