Australia’s growing insurtech sector attracting international interest with collaboration levels on the rise
Australia’s insurtech sector has evolved significantly over the last year, with the number of insurtech companies active in the market increasing by over half (53%). Contributing to this growth is the arrival of internationally founded insurtechs newly entering the Australian market, now accounting for 30% of the 2019 eco-system according to a new report released today, Insurtech: Enabling better customer value through collaboration.
The report, produced by EY Australia in collaboration with Insurtech Australia, is the second annual comprehensive examination of Australia’s insurtech ecosystem. Based on an online survey run in February and March of insurtechs, insurers, brokers and other providers operating in Australia, this year’s report findings show a sector that is growing at pace, maturing and becoming more financially stable, with 71% of insurtech businesses now either post-revenue or post-profit (compared to just 50% in 2018).
Andrew Parton, Partner, EY Australia said: “Australia’s insurtechs are playing an increasingly important role in the future of incumbent insurers, especially in the health and life insurance markets. In the last year, we’ve seen collaboration between incumbents and insurtechs – one of the major impediments last year – increase significantly, with a 75% increase in active partnerships.”
“While the majority (72%) of insurtechs are now collaborating with incumbent insurers, it’s now about making that collaboration more impactful. The research found that only 18% of insurtechs believe incumbents are currently doing enough to collaborate with them in order to truly drive industry innovation,” Mr Parton said.
“Our research shows that, while insurers understand the potential of insurtech innovation, uptake remains inhibited by operational constraints, legacy systems, technological readiness, compliance issues and concerns of privacy and security.”
“In order to reach the industry’s full potential and enhance customer value, considerable effort will be required on both sides of the equation. Incumbent insurers need to be proactive in removing the barriers to working with insurtechs, while the insurtechs themselves must be transparent about the maturity of their offerings,” Mr Parton said.
Simon O’Dell, Insurtech Australia CEO said: “Australia is fast becoming a global centre for insurance innovation, as demonstrated by in the rapidly increasing size of our insurtech ecosystem. Both locally founded startups, and international insurtechs looking to scale internationally now recognise our local market as a springboard to global markets, in particular the U.S. We have all the major international insurance companies in this market, but the market is small enough for big companies to be agile, embrace innovation, and make decisions quickly.”
“It is highly encouraging to see more incumbent insurance providers partnering with insurtech companies. However, there are other areas for improvement, including access to capital to help new Australian insurance startups. It is in all our best interests to see the Australia become the go-to market to test and scale new insurance ideas, technologies and business models. With some careful nurturing, Australia has the potential to be a leading player in the global insurtech revolution,” Mr O’Dell said.