Nearly all insurtechs in New Zealand are being forced to form partnerships with other start-ups or planning overseas expansion because local insurers as so apathetic.

About 65% of incumbent insurers and brokers admit they are not proactive in engaging with insurtechs, a report from EY and InsurTechNZ says.

Some 90% of insurtechs are approaching each other for business, while 67% plan to expand overseas in the next year; 31% of those plan to expand to Australia.

The report says insurtech development is challenged by New Zealand’s small population and limited access to the marketplace, which is dominated by single-player insurers and broking duopolies. The report says this creates a bias towards the status quo.

About 72% of insurtechs are working with incumbent insurers, brokers or service providers, yet 25% say developing a relationship with an incumbent is the biggest barrier to growth.

Some 63% do not believe there is enough collaboration between incumbents and insurtechs to realise a successful transformation of the insurtech ecosystem.

Seventeen insurtech companies have launched since 2017. Most focus on customer engagement and experience, but an increasing number involve back-end systems servicing both customers and insurers. There is little evidence of insurtechs trying to compete with incumbent insurers, according to the report.

While incumbents increasingly see the need for innovation, they prefer to own it themselves, the report says. It suggests insurtechs should better align with incumbents’ business drivers and demonstrate how they can tackle underlying problems.