A collaborative new insurance ecosystem
While the insurtech evolution is still at early stages compared with its big brother fintech, the momentum is certainly underway. In 2016, around US$1.69billion1 was invested in insurtech startups, and new platforms are attracting the attention of investors, incumbent insurers, reinsurers, brokers – and end consumers.
Of that $1.69billion, just 1% made its way to Australia.2 So are we falling behind?
Definitely not, according to Insurtech Australia co-founder Brenton Charnley.
“Australia has already been through ‘innovation 2.0’ – we’ve put all the paper processes online. Consumers now expect to buy it online, and manage claims or information through apps,” he explains. “Now, we can expect to see innovation 3.0 breakthroughs. And those will be harder, because it means changing the model and the market.”
Macquarie Bank’s Eoghan Trehy says globally, the investment flowing into commercial insurance technology is still relatively small.
“As we saw during Insurtech Connect 2017 in Las Vegas last month, and throughout our US study tour, health, life and personal insurance are seeing the most attention. Commercial is more complex – and this validated a lot of what we are already doing in Australia.”
Fourteen leaders from Australia’s insurance broking sector joined Eoghan and the Macquarie team on the tour, including Charnley. “It was great to get a really honest view of the landscape,” he says. “The American Family Ventures presentation proved 2015 was the tipping point: in that year, there were 50 insurtechs in the US. Now there are more than 500.”
A positive ecosystem for change
Insurtech Australia launched in October with a mandate to provide education and support for Australia’s insurtech startups, and connect them with potential partners within its founding member and corporate community.
“Unlike fintech, which has seen disintermediation and disruption for traditional banks, we’re seeing a growth in partnerships between insurtechs and incumbents,” says Charnley. “McKinsey data suggests at least 60-90% of insurtechs are enabling incumbents rather than disrupting them.”3
He gives the example of a bank that has partnered with a startup to provide a rental bond guarantee product based on externally available trust ratings - such as Airbnb and Uber reviews.