Deloitte has released a new report in its “Growth in Insurance Series,” examining the role of innovation across the insurance landscape in Australia and New Zealand amid rising global insurtech investment.
The report underscores the need for insurers across both countries to adapt swiftly to new risks and technology demands, all while balancing longstanding regulatory obligations.
The findings suggest that collaboration between traditional insurers and insurtechs is crucial for spurring growth and addressing industry challenges.
The findings are based on a 2024 survey conducted by Deloitte, which included 25 industry representatives from across Australia and New Zealand.
Survey respondents comprised traditional insurers and insurtech firms in health, life, general insurance, and reinsurance markets. These participants collectively represent approximately one-third of the gross written premium across both countries, making their insights indicative of broader market trends.
The report investigated key questions that focus on innovation in the sector, examining trends and challenges while identifying ways to strengthen partnerships.
It revealed that although industry players recognise the importance of innovation, they continue to face structural barriers that slow the adoption of new initiatives.
Deloitte noted that insurers in Australia and New Zealand face a complex environment with rising cybersecurity threats, technology advances, and evolving customer expectations, compounded by climate risks and economic fluctuations.
Traditional insurers encounter growth obstacles due to regulatory compliance and cost concerns, while insurtech firms focus primarily on gaining market acceptance and expanding customer bases.
Insurers and insurtechs are advancing their innovation efforts through both internal strategies and external partnerships, seeking to leverage technology to streamline operations, enhance customer experiences, and drive long-term growth.
Deloitte’s findings emphasised that collaboration is essential to foster innovation across the sector.
Traditional insurers look to insurtechs for expertise in technology and cost-efficient solutions, while insurtechs seek established insurers’ support to expand market reach.
Over recent years, both traditional insurers and insurtechs have begun using artificial intelligence (AI) and the Internet of Things (IoT) to improve customer engagement and develop innovative product offerings.
Traditional insurers report significant challenges due to legacy systems, competing resource priorities, and skills gaps, alongside an evolving regulatory landscape.
Insurtechs, on the other hand, struggle to gain traction within the ecosystem due to capital constraints and the slower technology adoption pace in the insurance industry.
The report suggests that simplifying regulatory processes and enabling sandbox environments for technology trials could ease collaboration between insurers and insurtech firms.
The report encourages the idea of “coopetition,” where insurers and insurtech firms combine resources to tackle industry-wide challenges.
Deloitte said regulatory support for innovation, such as the expansion of regulatory sandboxes, could help reduce uncertainty and encourage both investment and technology adoption across the insurance sector.
Meanwhile, global insurtech investment trends provide context for the potential growth within ANZ.
According to a recent report from Dealroom.co, Mundi Ventures, and MAPFRE, venture capital investment in the global insurtech sector is expected to reach US$4.2 billion by the end of 2024.
Funding in the first three quarters alone amounted to $3.2 billion, with the final quarter projected to focus on Series B and C funding rounds for expanding insurtech firms. However, late-stage companies continue to face funding challenges as investors demonstrate caution around high valuations.
