The Australian insurtech market is on a growth trajectory, driven by products aimed at improving efficiency, security and customer engagement, a report on the sector says.  

The paper – called Insurtech Down Under: Trends, Tech and Triumphs – examines emerging solutions and success stories.

“Start-ups that navigate regulatory complexities, secure funding and leverage emerging technologies will play a key role in shaping the future of insurance in Australia,” report authors Insurtech Australia and PFS Consulting write.

“The Australian insurtech sector is expanding rapidly, with investment and innovation transforming how insurance is provided. While it has not grown as fast as the fintech sector, insurtech is establishing its place within financial services.”  

The report also highlights the difficulties entrepreneurs face raising capital and finding early adopters in the Australian insurance industry.

IA CEO Simone Dossetor says there is potential to accelerate change in the industry with greater collaboration from across the local insurance market.  

“Large insurers and private sector investors are prioritising offshore tech funding over Australian innovation, missing a real opportunity to strengthen and grow the local Insurtech sector,” she says. “Australia’s private sector and insurance industry isn’t investing where it needs to.”

The nation’s start-up ecosystem has matured, according to the report, with a growing emphasis on capital efficiency and sustainable business models, and funding now focused on structured deals over speculative growth. 

There are 293 insurtechs headquartered in Australia and New Zealand, with total funding of $US1.6 billion ($2.54 billion) across 100 funding rounds over the past 12 years.  

Looking ahead, blockchain promises to strengthen IT security, offering greater transparency and enabling smart contracts that automate claim settlements. Quantum computing could advance risk modelling, and improve capital allocation and underwriting accuracy.  

“AI-enabled analytics are already improving risk profiling, while applications of machine learning are streamlining claims processing and enhancing fraud detection,” the paper says. “Technology has the potential to reshape insurance, with AI, blockchain and quantum computing likely to drive new efficiencies in underwriting, claims and fraud prevention.”

Challenges remain securing early-stage funding, accessing talent and navigating evolving regulatory landscapes, with venture capital “more selective [and] investors prioritising financial discipline and long-term profitability over rapid expansion”.

The report says: “Larger investments appear to be backing automation and AI-inclusive solutions, highlighting the increasing role of predictive analytics and process efficiency in risk assessment and claims management.”

Australia’s geographic isolation has encouraged start-ups to adopt a global mindset, according to the report. Many seek international investments and markets, particularly in capital-intensive deep tech sectors, and this focus on global scalability has been a key strength in navigating economic downturns.

The report says Australia’s overall start-up ecosystem has transformed in a decade from a “relatively secondary market into a global player”.

It has climbed into the top seven nations for global venture-backed funding – behind the US, UK, China, India, France and Germany – led by the success of companies such as Atlassian, Canva, Afterpay, WiseTech, Altium, Appen, Zip and Linktree.

“These success stories demonstrate Australia’s ability to scale businesses internationally despite geographic constraints. Australian start-ups ... have operated with lean structures, and prioritising profitability from an early stage has helped.

“This financial discipline has enabled them to expand globally without excessive funding, making them attractive to investors.”

Australia remains an attractive start-up hub because its smaller, less competitive market allows businesses to refine their products before competing internationally. Insurtech has particularly benefited, with growth fuelled by government incentives and policy support.

“Climate start-ups, in particular, are emerging as global leaders, benefiting from policies such as the US Inflation Reduction Act and EU regulations,” the paper says.