The collision from the physics asset is working with the player and the other assets on the level, but they do not collide with other NPCs, making all NPCs overlap each other and ocuppy the same place on the level if they are chasing the player for example. Making a horde just one animation asset for example.
Steps to Reproduce
Just create a custom NPC with physics assets configured for the actor.
Expected Result
The NPCs should collide with each other preventing them to occupy the same location on the level.
Observed Result
The NPCs overlaps each other, there is no collision between them.
Just in writing my response to this explaining what I had tried, I think I may have discovered the problem.
I may have a solution, but it will require testing and confirmation.
How many custom npc spawners are you using?
Can you try spawning them from multiple spawners and use different npcs in each one, just 1 npc per spawner.
I have a theory that because the physics assets a blueprint of the same object it has conditions in it which require it to ignore collision with itself, thus: No collision when its the same npc spawner using the same blueprint.