This push toward digitalization is driven by the growing impact of climate-related damages and increasing customer expectations for faster, more efficient service.
Hungary’s insurance sector is accelerating digital transformation in the face of mounting climate-related claims and growing consumer demand for faster, more transparent service.
According to the Hungarian National Bank’s (MNB) 2024 Risk and Consumer Protection Report, insurers have already begun introducing digital claims solutions and remote reporting tools to improve efficiency and responsiveness.
Yet, as also highlighted in the same document, many insurers still operate on outdated back-office systems, creating a growing disconnect between modern digital front-ends and legacy infrastructures that delay automation and slow down claims resolution.
This disconnect is becoming more costly as environmental risks intensify. According to the MNB’s 2024 Macroprudential Report, approximately 6.7% of the country’s territory is affected by floods annually, with a one percent probability each year. The financial impact of the extreme weather events is immediate: in the first half of 2024 alone, storm and flood-related damages caused a 35.6% year-over-year surge in residential property insurance payouts. This spike has exposed the limitations of traditional claims management methods, many still relying on manual assessments and lengthy on-site inspections, and underscored the need for faster workflows.
“Today’s insurance customers expect speed, clarity, and convenience,” says Dalius Šimaitis, CEO of PortalPRO, a Proptech company focused on property maintenance and repairs, that also supports insurance companies with an AI-powered claims assessment tool. “Waiting five or ten days for an insurance claims expert to arrive on-site no longer fulfills customer expectations, especially when extreme climate events cause widespread damage. The industry must transition to faster, data-driven workflows.”
To meet rising expectations and respond more effectively to climate-related losses, Hungarian insurers are accelerating the adoption of digital tools such as photo-based damage reporting, AI-driven claim triage, and self-service portals. These technologies promise faster resolutions and improved fraud detection.
However, according to Kornél Bakó, head of PortalPRO Hungary, the full adoption of new tools is often slowed by familiar legacy systems that organizations have long relied upon.
“We have spoken to companies that still rely on enterprise software from the 1990s, like Lotus Notes,” he says. “These systems may have worked under the old model, but they are incompatible with cloud tools and AI technologies that are now essential for efficient claims handling.”
Bakó points out that although digital administration has increased following the COVID-19 pandemic, most automation projects remain in pilot stages. “Self-service damage declarations are now more prevalent, but often the actual assessment remains manual. The front end may be digital, but the back end hasn’t caught up.”
The barriers to faster adoption are not only technological but also cultural. Some field experts often resist automation, arguing that machines cannot replicate expert judgment in damage assessment. Others point to unresolved questions around liability, privacy, and regulatory compliance.
“At some major insurers, there is still a lack of clarity on who is accountable for AI-assisted decisions,” Bakó adds. “This uncertainty slows down implementation, even when the technology is ready.”
Another issue is the relatively low level of data culture across parts of the sector. “Too many decisions are still made based on habit or intuition rather than structured analysis,” says Bakó. “Until that changes, tools alone won’t transform outcomes.”
Though different challenges remain, both experts agree that automation will increasingly handle routine elements of claims processing, while human experts focus on complex, high-value cases. Šimaitis emphasizes that technology is meant to support, not replace, professionals.
“AI will not have the last word,” he says. “But it will reduce time spent on repetitive tasks and give experts better data at every step. That’s where the real value lies.”
Looking ahead, fast-track models may soon become the standard. Bakó shares his prediction that within the next three to five years, more than 60% of damage claims in Hungary may be processed automatically, based on user-uploaded images, pre-validated templates, and AI-powered analysis. This could pave the way for what he terms “real-time underwriting,” with claims and risk data being fed directly into pricing and prevention.
Experts conclude that Hungary’s insurance sector now faces a strategic choice: adapt gradually or take a decisive leap toward the digital future already being built in neighboring markets. The operational case is increasingly apparent as the cost of delay continues to rise.
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