Insurers must face the “elephant in the room” and accept they will be disrupted by the sharing economy, the Insurance Council of Australia’s annual forum heard.

NSW Minister for Innovation and Better Regulation Victor Dominello told delegates the collaborative economy was worth $500 million to NSW last year.

The state will continue to lead the way in regulating the sector and encouraging innovation, and insurers had better get used to it, he says.

“For the insurance sector, it is bound to be disrupted. My challenge is to make sure the consumer is protected.”

John O’Mahoney, Partner at Deloitte Access Economics, says the sharing economy should be considered an opportunity rather than a threat.

But he told the forum insurers face both indirect and direct disruption.

Peer-to-peer insurance is developing in some countries, but is still at “an embryonic stage”.

“I think the concept will struggle,” Mr O’Mahoney said. “There will come a time when the insurer knows more about the individual’s risk than the individual.”