An industry analyst says fast-moving insurtechs and cautious insurers are still feeling their way towards working together on innovations.

“This is the major challenge I see in this space,” EY partner Andy Parton told insuranceNEWS.com.au. “Bringing these two different cultures together is like suits and jeans and getting those two things to work.”

EY and Insurtech Australia will launch their inaugural sector “ecosystem report” at the Australian and New Zealand Institute of Insurance and Finance’s Insurtech Conference in Sydney on May 2-3.

Mr Parton says the creation of Insurtech Australia was part of a significant expansion of the sector, growing from almost nothing over the past 12-18 months.

“What we wanted to do with this report is take a pulse on what that market looked like, in size and scale and focus, and also what is the sentiment of the insurtech companies out there in terms of what they are trying to achieve and how they are seeing that play out with the incumbent insurers.”

Mr Parton says start-ups, which are often still founder-funded, and major insurers face time pressures of different types.

Companies that embrace innovation and work with insurtechs to re-engineer their processes are likely to have good prospects over the next few years.

“Frankly, those that aren’t successful in doing that are going to be challenged and threatened.”

Insurtech Australia CEO Brenton Charnley says the focus remains on enabling rather than disrupting, with the local sector well placed to be a more significant global player.

“To do that we need to attract more investment, we need to move faster in trialling new technology and we need to deliver products that the customer ultimately values,” he said.

Incumbents often grapple with the “innovators’ dilemma”, where they face the fear of eroding what they have while moving in unproven directions.

Mr Charnley predicts insurance will change in coming years, with data and technology providing more dynamic and personalised products, which may include more unbundling of cover for specific assets.