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Insurtechs urged to build on partnership progress

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Australian insurtechs are making the case to insurers that they can be partners, a new report shows.

Nearly three-quarters of insurance-focused start-ups are in “active partnerships” with insurers, with the number up 75% from last year, the joint EY and Insurtech Australia study reveals.

“Insurtechs are helping incumbents to develop innovative insurance products and deliver services that better align with customer expectations,” the report says.

“We also expect incumbents… to leverage emerging technologies as a defensive strategy to meet the demands [of] the Hayne royal commission that they demonstrate they are providing the right product to the right customer at the right price.”

Insurtech Australia CEO Simon O’Dell is pleased with the progress and urges start-ups to build on the opportunities that have been created.

“We are really pleased with the data that has come through, because it validates the quick evolution of our ecosystem as a collective, as well as the performance of the insurtechs individually,” he told insuranceNEWS.com.au.

“The next step is to take advantage of the insurance incumbents’ appetite to partner and also to take advantage of the networks that have been created in the global marketplaces in London, Europe and the US.”

While there are more collaborations, only 18% of insurtechs feel insurers are doing enough in partnerships to drive innovation.

Mr O’Dell believes this could be due to differences in corporate culture.

“A lot of the incumbents will want to project-manage an innovation initiative within their business in a traditional project management way, [while] the reason why tech start-ups are effective is because of their lean start-up methodology and their quick and nimble way of introducing innovative products,” he said.

He urges insurtechs to “understand that they are dealing with a large company”.

The report says insurtechs are on a financially stronger footing. About 71% are in the post-revenue stage, up from 50% last year.

The number of insurtechs operating in Australia increased by 53%. About 30% were started overseas before setting up bases here.

The study questioned 54 respondents at 39 insurtechs, 12 incumbents and three intermediaries or service providers.