4 August 2020
The EY 2020 Australian insurtech ecosystem report shows insurtechs, insurers and service providers agree that the industry is driving value through insurtech, but there are several areas ripe for innovation.
EY’s previous two reports found insurtechs were predominantly collaborating with, rather than disrupting insurers and that partnerships were starting to form and beginning to create value. This year, EY explore the extent to which these partnerships are creating value for incumbent insurers and insurtechs at scale. The 2020 report examines how and why partnerships are currently working, including where value is already being created and how this can be optimised.
- Partnership is the way forward: Partnering with insurtechs is increasingly common across the insurance industry and is expected to become mainstream. But right now, the use of insurtech is relatively low and the industry remains some way from maximising value creation at scale.
- Major opportunities for future value creation: Insurers, insurtechs and service providers broadly agree that opportunities for value creation are being optimised – but there is room for growth. Having seen incremental value creation over the previous three years, the industry has great expectations of using a partnership approach to drive value realisation over the next three. Our respondents recognise it’s time to ramp up partnering to address opportunities right across the value chain. Pivotal areas that the industry agrees are ripe for innovation include: efficient administration, pricing and underwriting agility and new products to deliver differentiated customer value propositions.
- The rise of true ecosystems: As the platform economy matures, insurers will move beyond the simple alliance models and develop the infrastructure to support plug and play and cross platform integration capabilities to create true ecosystems. One of the key ingredients here is putting the right infrastructure around legacy systems, so insurtech can plug into the enterprise. To this point, digital enablement platforms will be important to support insurers in transitioning from old to new distribution channels – offering an alternative to replacing legacy core systems.
- Critical get rights: Deploying insurtech at scale is the only way to keep up with fast-moving technology developments and satisfy rising consumer expectations. As insurers move to realise the value they can see across the value chain, the key areas to focus on are:
- Finance and Strategy – Insurers need a focused insurtech strategy as part of their broader digital and innovation strategy. It’s vital that all parties share a clear understanding of the business problem being solved and the desired outcomes.
- People – Successful insurtech deployment requires a strong champion in the insurer’s business – someone with a clear vision and the ability to challenge group-think or traditional views of the industry. Insurtechs will need to be given early access to this champion and other C-level decision makers.
- Execution – Strong implementation plans and road maps with clear timeframes and expectations are essential, but they not enough on their own. They must also be supported by streamlined procurement, flexible contracts and robust information sharing protocols.
- Systems and Technology – The industry needs to move beyond taking a siloed approach to insurtech delivery and go past the ‘proof of concept’ mentality. To deliver true value, insurtech require a number of capabilities – from innovation to create ideas into design, tests and iteration and then rapid deployment into operations in more of a business-as-usual approach than that of bespoke projects to achieve the scale required.
Read the full report via EY.