Life insurers are ramping up efforts to improve pricing and underwriting efficiencies with the help of startups to make it possible, a new insurtech study shows.
The second annual EY and Insurtech Australia report found almost three-in-four (72%) insurtechs are collaborating with incumbents, representing a whopping 75% increase from 2018.
Life insurance firms that took part in the survey partner with insurtechs to help with product and distribution innovation, marketing and administration, and pricing and underwriting agility.
Additionally, insurtechs are helping improve organisational efficiency and accelerating digital transformations.
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Interestingly, over two-thirds of respondents believe their customers would be happy to share their personal data for more accurate pricing, as long as security measures are in place to govern and protect it.
The fact that incumbents have not been able to seize such opportunities is because of slow technology, operational constraints and inadequate understanding of consumer needs, the insurtechs said.
EY Australia partner Andrew Parton commented that while insurers understand the potential of insurtech innovation, uptake remains inhibited by operational constraints, legacy systems, technological readiness, compliance issues and concerns of privacy and security.
While the majority of insurtechs are now working with incumbent insurers, Parton said the focus should now be about making that collaboration more impactful.
"The research found that only 18% of insurtechs believe incumbents are currently doing enough to collaborate with them in order to truly drive industry innovation," he said.
Over 2019, Australia's insurtech ecosystem grew by 53%. Contributing to this growth is the arrival of international insurtechs, which now account for 30% of the market.
Raising capital appears to be improving as a third of insurtechs have secured more than $2 million, up from 24% in 2018.
But more work is needed to ensure that access to capital does not limit the growth of both early-stage start-ups and the wider ecosystem, Parton said.
In 2019, only 29% of insurtechs were in pre-revenue phase. This marks a large drop from 50% that reported a positive revenue outlook in 2018.
This year's Insurtech: Enabling better customer value through collaboration report canvassed 54 respondents in the health, life and general insurance industry.