EY New Zealand and InsurTechNZ recently launched their first study into New Zealand’s insurtech landscape, which aimed to ‘initiate the right conversations’ between incumbents and insurtechs to kick-start potential business partnerships – something which will be invaluable in the future of insurance as a customer-centric business.
The survey quizzed players across both the insurance and tech sectors, and discovered a fairly young insurtech network that is ripe for collaboration. However, it also discovered a number of hurdles from both sides of the fence which meant they might eye each other with caution – something which needs to be addressed if New Zealand is to be a strong player in the growing insurtech landscape.
“It’s great that this survey has been conducted for the first time in New Zealand,” EY partner Graeme Horne said, introducing the report. “We often find that little New Zealand is left out of these things, and so we just try to extrapolate anything we can from the Australian results when they come through – but they don’t always mean anything for us.”
“It is still a relatively young ecosystem in New Zealand, and some of the key players in the market have only been around for about five years,” Horne continued. “But although there is some good collaboration going on already, there is certainly opportunity for a lot more.
“There is a perception that the bigger insurers are monolithic and hard to work with due to their legacy systems, culture and product suites, and that the insurtechs are fresh and ‘cool’ but also a risky investment with limited scale. Getting the two around the table can therefore be somewhat difficult.”
Katarina Wichmann, senior manager at EY said that customer engagement was the first and most important value proposition that companies tended to align to – a positive sign, as it follows the general trend of customer centricity.
The study found that 31% of respondents were enabling their offering with some form of digital marketing platform, and 26% were using AI and machine learning. A further 20% planned to invest in AI; 16% were looking at utilising blockchain, and others were interested in areas such as big data, analytics and new business models. When it comes to collaboration however, the approaches of incumbent players and insurtechs differed greatly.
“There is definitely a need for simplification and customer centricity rather than product centricity, and we also have new companies entering the market who don’t need to deal with any legacy systems, and who can really shake up and disrupt the market,” Wichmann said.
“We found that collaboration between insurance companies and insurtechs are currently being classified as rather reactive; whereas if you look at collaboration between insurtechs, it is primarily proactive. So there seems to be quite a different technique between the two markets.”
“We found that insurance incumbents had concerns about the organisational structure, scale and understanding of established technologies and data security when it comes to insurtechs,” she explained.
“On the other side, insurtechs saw challenges around the incumbents’ awareness of their business and their strategic alignments, as well as potential difficulties in communication. These are some challenges that need to be addressed, and, if we can spark a few conversations in this area, then that would be a really good outcome.”
Jason Roberts, founder and co-chair InsurTechNZ says the opportunities for insurtech in New Zealand are endless, and that, globally, the area is set to overtake even its parent fintech when it comes to uptake and investment.
“We have an investment environment, and we know that last year, $4 billion was invested globally into insurtech – that’s beginning to outstrip fintech, and it’s growing much faster and with a lot more energy,” he said.
“It’s quite powerful to see the recognition that we have for a market called ‘insurtech’ here in New Zealand.”