APAC Insurance Market Trends To Watch For Growth In 2025
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A version of this article was originally published in the Asia Insurance Review Magazine.

Stepping into 2025, Asia Pacific’s insurance executives face a myriad of macro trends in the region. Geopolitical tensions and regionalization, such as the ongoing trade dynamics between China and the United States, are reshaping market strategies and partially driving supply chain shifts to the Association of Southeast Asian Nations (ASEAN) countries and India. Healthcare costs are continuing to increase rapidly across the region. Economic growth in Asia Pacific tier 2 cities is creating opportunities for businesses to broaden insurance distribution, as well as for executives to rethink how to serve customers.

The population of many Asian Pacific countries is progressively becoming richer, with a burgeoning, under-insured middle class rising across countries. At the same time, while most advanced Asian economies are rapidly aging and living longer, emerging countries are witnessing the rise of a younger population, creating a paradox of serving both aging and younger populations going forward. 

In a nutshell, there are multiple challenges and opportunities ahead for insurance executives in Asia Pacific. This brings the potential for significant growth if insurance executives make the right big bets. In this article, we deep-dive into three of our 10 to-dos for insurance CEOs in 2025 that are particularly relevant for Asia Pacific. 

Evolve distribution channels to meet rising customers’ needs

As intermediated channels remain strong across regions, work tightly with your existing distribution partners to “augment” the customer experience and value proposition and strengthen your joint competitive moat.

Intermediated channels, such as tied agency, financial advisors, bancassurance, and brokers, continue to thrive in Asia Pacific. These channels currently represent more than 90% of the sales across most markets and lines of business, with direct-to-consumer channels having grown slower than expected. 

However, many challenges lie ahead. Agency channels need help attracting new talent instead of losing it to other channels and non-insurance careers. Bancassurance in some parts of Asia Pacific has been facing customer-centricity-related challenges and needs an increasingly sophisticated toolkit for relationship managers and sales specialists that requires effort to build. Meanwhile, customer expectations keep rising, which contrasts against often-dated, poorly integrated insurance purchase journeys.  

There is an opportunity here to embrace the relationships more tightly and forge stronger win-win collaborations between insurers and their existing distribution partners, focused on reinventing the end-customer value proposition and deepening their joint competitive moat. For example, agents and insurance specialists can become end-to-end financial concierges, augmented with leads support, analytics, novel data sources, and an ecosystem of products and services beyond traditional insurance products. 

This vision requires closer collaboration, founded on shared success rather than maximizing the short-term economics of any one side. Joint development of product propositions, focusing on bringing an ecosystem of solutions (beyond basic insurance products) to customers, and shared technology investments will be key to maximizing success. 

Ride the global retirement wave by offering holistic solutions

Take a leading role in addressing the large unmet need around holistic solutions, combining advice, accumulation, and decumulation, as longevity becomes an increasing challenge around the world.

Asia Pacific is rapidly entering the “Age of Aging.” By 2035, the median age in China, Thailand, Singapore, and Hong Kong will be between 45 and 50 years; it will be around 30 to 35 years for most Southeast Asian countries, while in Japan, it is already around 50 years. Across Asia, approximately 80% of individuals anticipate a gap in retirement funds by the time they turn 60 years old, with the average person expected to outlive their retirement savings by approximately 10 years. This demographic shift presents a significant challenge across the region for both individuals and insurers, as traditional retirement systems struggle to provide sufficient support. The complexity is exacerbated by a fragmented approach from the wealth management, asset management, healthcare, and insurance sectors, which often operate in silos, leading to disjointed customer experiences and an ever-growing unmet need. 

Cracking this challenge requires combining distinct capabilities to offer holistic need-based solutions with a “retirement ecosystem” that transcends multiple industries. These capabilities include providing longevity, need-based healthcare, and income guarantee-type coverages while delivering competitive returns and individualized guidance on managing retirement assets. 

Success will involve breaking down silos and fostering much stronger partnerships across the insurance, asset management, insurance, healthcare, wealth management and other sectors. It will also require aligning operating models with client-centric goals and associated metrics across these industries. While insurers do not necessarily need to lead the solution itself, a true partnership will require investments in product development, market education, and technology. As the market for innovative decumulation solutions develops, insurers are also figuring out their roles. However, players who do not bring proprietary capabilities to the table will be rapidly commoditized and replaced with the lowest bid. 

Start with transformation, leveraging advanced AI tools as an enabler

Asia Pacific is the region where insurers have had the highest generative AI adoption to-date: 54% of Asia Pacific insurers had generative AI solutions in production as of last summer versus 42% for Europe and 28% for North America. In addition, the work to-date is primarily focused on “augment” scenarios rather than being purely efficiency-focused, as these are more common in Asia Pacific than in Europe or the United States. Marketing and distribution, agent service, and customer service are some of the more common themes for insurers in the region. 

However, while the age of proofs-of-concept (POCs) is over, the age of scalability hasn’t quite arrived yet, despite a hard shift away from POCs and towards scaling use cases. We believe AI is not the solution to transformations; instead, it is an enabler. To harness the potential of generative AI, insurers must begin with a transformation oriented around their most critical enterprise goals or large, unmet customer needs. AI should be integrated as a powerful tool within a broader transformation strategy that addresses strategic, operational, technological, and behavioral changes. This “AI Inside” approach ensures that AI is not seen as a standalone solution but as a critical component that supports the overarching transformation objectives. 

Looking ahead, while each market has its unique characteristics, insurance executives across Asia Pacific will be able to relate to these priorities in what should be an exciting 2025 for the industry across the region. 

Read the original piece, here (paywall).