The Australian and New Zealand insurance market is at a critical “adapt or fall behind” juncture, according to Deloitte. 

While innovation is widely recognised as essential, significant barriers exist, the consultant says in a report. 

Collaboration between traditional insurers and insurtechs is key, because combining legacy expertise with fresh, tech-driven perspectives offers the “greatest potential for industry-wide transformation”.

Innovation must be “approached as a discipline”, Deloitte says, with measurable targets and a culture that supports change.

“The call for innovation needs to become a collective mandate, embraced by all stakeholders, from C-suite to customers,” it said.

A Deloitte survey of 25 insurtechs and traditional insurers across general, life, health and reinsurance found the industry is “at a crossroads”, with insurers facing rising cyber threats, rapid tech advancements and changing customer demands at a time of climate and economic uncertainty.

“Collaboration is key to drive innovation across the ecosystem. Traditional insurers seek expertise, cost efficiency and tech gains, while insurtechs chase rapid innovation, expanded reach and customer growth,” the report says.

Traditional insurers and insurtechs have been teaming up more strongly on AI and internet of things technology in recent years, according to Deloitte.

Cutting red tape and enabling “sandbox” trials will ease collaboration and drive collective innovation by pooling industry resources to solve shared challenges.

Deloitte identifies six ways to help the sector overcome innovation barriers:  

• Ease bureaucracy associated with setting up partnerships
• “Co-opetition” to tackle industry challenges
• Invest in technology adoption 
• Redefine risk management frameworks
• Dedicate to fostering an innovative culture
• Ease regulatory and compliance barriers. 

See the report here.