Talk of insurtech has become rife in Australia with the number of educational events rising rapidly and even a dedicated industry association launching last year – however, despite the apparent interest, it seems some major players have doubts over just how invested the incumbents really are.
Colin Fagen, co-founder and managing director of Blue Zebra Insurance, is among those who have concerns – in fact, the former QBE-exec recently called out the incumbents, saying their investment in insurtech is often more about placating stakeholders than making a real commitment to progress.
“There’s a lot of talk in the market about insurtech and there’s a lot of talk about dollars being invested – but I think there are also a lot of questions around what’s actually been achieved,” says Fagen.
“It’s alright for the big insurers to sit there and say they’re going to spend $50 million on investing in start-ups and small organisations but my question to them would be; how much of their core business is actually going to change?”
While the majority of major insurers are now exploring insurtech, Fagen told Insurance Business that the discussion is still at a surface level for most and is often lacking deeper consideration.
“They’re not talking about the change management aspect or how they’re going to bring that innovation into their core business, there’s very little transparency there, and they don’t talk about which distributions their investment is going to affect or how it’s going to affect their distribution sources,” he said.
Fagen, who has almost 30 years’ experience in the sector including a number of C-suite roles at QBE, says he seriously questions whether incumbents are up to the job of adapting to tech.
“Their businesses are slow-moving, they’re large whereas the use of technology is actually extremely dynamic,” he says. “If they don’t truly change their organisation from top to bottom, they can’t move that quickly and they’ll continue to be out-competed by the more nimble, faster players.”
While Fagen’s views are unlikely to go down well with the major insurers, he’s certainly not the only one who holds them – Naby Mariyam, CEO of Coverhero, also says there’s a lack of meaningful investment in the Australian insurtech space.
“There has been a lot of dialogue and awareness and education and a lot of theories as to how this is going to affect the industry – but there is still a lot of denial and not knowing what do to,” she told Insurance Business. “We’re only just seeing the industry very slowly dip their toes into digital innovation.”
Mariyam, whose insurance platform is the first of its kind to be built on Ethereum blockchain, also said she’s observed significantly less financial investment in the Australian insurtech space, compared to other regions.
“A lot of the big insurance companies based here that are not Australian, a lot of the venture funds are not based here so there is very little money, next to no money, being invested into Australian insurtech,” she told Insurance Business.
“There’s been a lot of investment from Europe and America and also in Asia into insurtech but we’re not seeing Australia participate in that and I think that goes to a very conservative culture around unknown technology or unknown markets.”
Again mirroring Fagen’s views, Mariyam also questioned the ability of Australia’s incumbents to adapt to the rapidly evolving technology of today.
“I’m not a big believer in the capability of structurally and culturally and bureaucratically-challenged enterprises to be able to truly innovate without outsourcing it,” she said.
“There is a way of doing it, and some of the incumbents are actually doing it, and that’s by setting up hubs independent of the incumbent so that they can move in an agile way and not be influenced by bureaucracy from the mothership,” she continued. “That is the way to do it but we’re just seeing a micro-drop in the ocean in the Australian ecosystem.”