According to the panel discussion, this ultimately depends on the value each participant creates along the way. Perceived value balances both benefits and cost, so insurtechs that reduce the pressure of operating costs (such as low-cost claims management) are increasingly attractive.
“The reason there are so many parties in the supply chain is we are all specialists at what we do. To survive, we need to hone in and do what we do best,” explained Alison Brough, National Manager of Strategy and Key Partnerships with Allianz.
She talked about the additional value of combined expertise: “We need to enhance each other’s role, rather than threaten their existence.”
Trehy believes those controlling the relationships are relatively secure. “One of the things we learned through our study tour to the United States last year was that startups need distribution. If they get that before an incumbent innovates, the startup may potentially have the upper hand.”
But this typically has happened elsewhere when startups create entirely new value chains, fuelled by external capital – as Uber did in the taxi industry. Trehy doesn’t see that happening to the same extent in insurance.
“Insurtech is bringing in clever ideas, but it is making incremental improvements to legacy systems rather than complete transformations,” he explained. “Incumbents are providing capital to startups and insurtechs that show new ways to enhance their current offering. Tech that integrates with their existing platforms and removes traditionally clunky processes.”
Oliver Wyman’s Angat Sandhu believes Australia is poised to see more capital investment in insurtech coming through. “We’ve seen a lot of activity globally, and things in Australia will start to change,” he noted during the panel discussions.
However, Trehy is concerned by the slow commitment to investment from Australia’s insurance broker community in general.
“In our benchmarking, we asked brokers where they planned to make a significant change or investment in IT or software systems over the next three years. 21% said none at all – and more than half were focused solely on investing in their website.”2
Panellist Simon O’Dell, Insurtech Australia’s CEO, believes brokers are in the best position to partner with insurtech. “It’s a way to outsource innovation, to transition through to the industry of tomorrow.”
The panel also agreed legacy systems are a hindrance. “We’re using platforms that are 30-plus years old and while we’re transacting online it’s clunky,” commented Austbrokers General Manager Rebecca Wilson. “If we can do things online more efficiently, we should improve relationships further because we’ve given phenomenal service.”
From distribution to data
Although technology has so far focused on distribution, the panellists noted the opportunity for data analytics – and they expect blockchain, artificial intelligence and machine learning to increasingly play a role in these areas. Data collection can be a significant friction point – but ‘big data’ offers potential to tailor more sophisticated insurance products and advice.
Trehy believes blockchain needs to be explored at all parts of the value chain. “It could significantly simplify insurance delivery – someone will crack how to use distributed ledgers to capture data and streamline the customer experience very soon.”
One thing is certain: those legacy systems aren’t going to see the industry through the next few decades.
“I don’t think it’s a case of human versus machine, but understanding how the machine can take away the manual, clunky administrative and operational processes,” said Trehy. “That frees the broker to give advice to the end client and deliver tangible value when they need it most.”