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Pandemic seen as boost for insurtech momentum

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Insurers are likely to step up their strategies for working with insurtechs as issues highlighted by the COVID-19 outbreak accelerate interest in partnerships, Insurtech Australia CEO Rita Yates says.

The third Ernst & Young-Insurtech Australia annual survey has found 80% of insurers are collaborating with an insurtech and 66% of incumbents believe partnerships with insurtechs will become mainstream within three years.

The survey was open for about 12 weeks from April 25, with 103 responses received from insurtechs, incumbents, intermediaries and service providers.

Ms Yates says the pandemic outbreak triggered a slight pull-back in momentum before incumbents again focussed on opportunities from insurtech partnerships.

“Part of that was driven by all of a sudden having remote workforces and changing work environments, which meant that where digital capabilities were lacking became much more evident to them as large organisations,” she told insuranceNEWS.com.au.

“The likelihood is that will mean there is an increased budget put towards digital activity across incumbents.”

EY Oceania Insurtech Leader Andrew Parton says insurers need to move beyond “random acts of digital” and put infrastructure in place so legacy systems can connect with new technologies.

“While it’s pleasing to see more collaboration and partnerships occurring, most Australian insurers are still only using insurtech tactically, rather than trying to develop a more strategic whole-of-business digital ecosystem,” he said.

Currently, 63% of insurers have partnerships with between one and three insurtechs with 14% partnering with five or more.

“This will change over the next few years as insurers seek to increase their number of insurtech partnerships to broaden their digital ecosystem and extend insurtech use across their entire value chain,” Mr Parton said.

The survey finds that two-thirds of incumbents believe partnerships with insurtechs will become mainstream within the next three years.

Some 58% of insurers expect a large volume of insurtech acquisitions over the next three years as capabilities are expanded, while an equal percentage expect consolidation of insurtech providers.

See Analysis.