Following the launch of TAS’ Insurance Industry Report, we interviewed Rita Yates, CEO of Insurtech Australia for her insights on the report…
What are the key highlights or insights that stood out to you in the TAS Insurance Report?
Overall, I found the report quite encouraging from a few different aspects. The first being that there seems to have been quite a mindset shift with leaders that responded to the report in that their focus is much more on the customer and delivering an amazing customer experience. This was far more prominent in comparison to the previous report which found organisations to be focused more internally at that point.
The reason this is encouraging is the second point that stood out to me. Many of these leaders are also exploring partnerships with Insurtechs and are realising the potential benefits that Insurtech companies can bring to the organisation, particularly from a customer experience perspective.
And the third piece I’ll point out is that there’s going to be a lot more investment going into the tech development space whether that be for their own internal tech or external partnerships and working with external parties, including insurtechs.
Hopefully all this leads to a much better customer experience from an insurer’s perspective. And as I’ve said, that plays very much into the space where we work at Insurtech Australia which is really promoting and aiming to build a world class Insurtech ecosystem here in Australia.
When we are looking to the future, what are the key challenges and opportunities that are facing the insurance industry?
I would say that the challenges in the sector are reasonably well accepted now in the industry as a whole. One of the key challenges is something that was brought up in the previous TAS report which is that legacy systems still remain in insurance for the most part, and that can certainly hold back innovation.
Secondary to that is a generally slower process to innovate, whether internally or through external partnerships. I would say that’s one of the key things holding the industry back as a whole. And on the flipside of that, Insurtechs tend to work in very agile, fast-paced environments so there is a marked difference between those two categories of organisations.
Encouragingly, there is certainly a much better understanding of these differences and more initiatives are being implemented to address that speed differential between Insurtechs and incumbents.
On the opportunities front, as I mentioned earlier, we are certainly seeing some really encouraging signs particularly around partnerships between incumbents and startups. The recent report we released with Ernst and Young showed that the number of partnerships between incumbents and Insurtechs has gone up by 75 per cent in the last 12 months which is massive. This is very much inline with the data in the TAS report which showed a much stronger focus on exploring partnerships.
I believe this is very much still in its early stages. There’s a lot of very early stage partnerships, very early stage pilots and early research being done into this space. And there’s huge potential for that to grow in much more significant ways to really leverage partnership opportunities that could benefit the industry as a whole.
Obviously, this is beneficial for the organisation, but also I’m assuming ultimately for the customer that these partnerships will really help organisations focus on customer experience which is brought out in the in the report.
Yeah absolutely. That’s 100 per cent correct. The ultimate goal is to benefit the customer at the end of the day and from an Insurtech perspective customers have always been at the forefront of their minds and I think it’s great to now see that incumbents aligned with that.
What do you think has led to this change? As you’ve said the last TAS report was very much about organisations looking inwards, rather than at partnerships. A real shift has seemed to take place, what do you think has led to that?
I think over the last couple of years there have been a number of things impacting this shift.
Initially when Insurtech was in its very early stages in Australia, Insurtechs were seen as disruptors and a threat to incumbents. As the ecosystem has matured, it’s very clear that around 90 per cent of Insurtech companies in Australia work as enablers. That is, they are essentially looking to work with incumbents to either improve a part of the insurance process that they’re already delivering to customers or offer brand new propositions to their customers.
The second piece to that is that it is much more universally acknowledged now that the needs of customers are very different to what they have traditionally been in the insurance world. Customers, for example, expect everything to be quick, easy, and mobile. As they listen to peer reviews, they act in very different ways to what they did, say five years ago or so. And there’s a recognition that if insurance companies don’t take that very seriously and approach customer experience in different ways to perhaps how they have traditionally approached it, that those customers in the future may end up having other options and may end up going elsewhere.
Is there anything else that we haven’t covered that you would like to mention?
A couple of things I’ll probably mention.
It’s also great to see an increased focus on the importance of an innovative culture within an incumbent. And I think the challenge now is how that actually comes to life. Somewhere in the report it was discussed that this will need to come from the top in terms of the vision to actually really create an impact from an innovation perspective. It will be interesting to see how that progresses within incumbents.
Another point in the report indicated that there is still some nervousness around partnering with startups which we can see is potentially still holding back progress. Perhaps that goes back to your question around the challenges still facing the industry generally.
We certainly acknowledge that nervousness in the partnership process between Insurtechs and incumbents considering experience in this space is still in the relatively early stages. But as mentioned in the report, one of the aspects of an innovative culture is around taking risks. So, piloting with a startup in a very structured and strategic way can actually be much lower risk than potentially building a whole team internally to try and deliver a capability which solves a particular problem, which may ultimately fail. So hopefully we will see that the nervousness that incumbents have will lessen over time, as they undertake more pilots and partnerships with external organisations.