Fraud in the Fast Lane Evaluating the Vulnerabilities of InsurTech Systems in Southeast Asia

Abstract

As Southeast Asia embraces rapid digital transformation in its insurance sector, InsurTech platforms are increasingly becoming targets of sophisticated fraud schemes that exploit gaps in AI-based decision-making, digital onboarding, and weak regulatory harmonization. This study investigates the vulnerabilities inherent in emerging InsurTech systems in Malaysia and the Philippines, examining how digital fraud manifests through identity spoofing, algorithm manipulation, and falsified claim submissions. Data was collected through surveys of 120 insurance professionals, interviews with regional regulatory bodies, and case analyses of four InsurTech firms operating in the region. Findings reveal that platforms lacking adaptive fraud detection algorithms and layered authentication protocols experience fraud rates nearly 50% higher than those with integrated blockchain-based verification and AI ethics controls. Moreover, regulatory fragmentation and limited cybersecurity literacy among users exacerbate the fraud challenge. The study proposes a “Southeast Asian Fraud-Resilience Model” that emphasizes regional collaboration, real-time analytics, and the embedding of RegTech modules in core insurance workflows to build trust and reduce fraud in digital insurance ecosystems.