'Just beginning': Insurtech Australia panelists say sector has only scratched surface

Australia’s insurtech industry is “still nascent” with huge potential for growth in coming years, presenters at the inaugural InsurtechLIVE conference in Sydney said.

Insurtech investment makes up only a small part of broader funding for fintech and this underrepresentation marks an opportunity for startups with “novel and meaningful” offers, particularly those able to fix a “top 5” problem at an incumbent insurer or other business, attendees at the Insurtech Australia event heard.

“We are just starting to scratch the surface and we have a long way to go,” QBE Ventures CEO James Orchard said.

Tiger Financial Group executive Solai Valliappan, who is an actuary, says that of almost $8 billion venture capital investment in Australian industry last year, a quarter went to fintech – and only 5-10% of that to insurtech.

“In Australia about $150-250 million went into the insurtech space. That seems small if you were to look at insurtech as a percentage of financial services at macro level,” she said. “It’s really nascent so I am really curious to see how much further we are going to grow.”

Zemble CEO and Co-Founder Aurora Voss, who moderated the panel, agreed insurtech was at an early stage of what is set to be great transformation.

“Insurance can feel like it’s been around for so long and it moves so slowly, but truly we are just beginning,” she said.

In another session attended by insuranceNEWS.com.au, Honey Insurance CEO and Founder Richard Joffe said retail, manufacturing and healthcare all attract relatively more R&D spend than insurance does. Going forward, he says pools of risk capital “will move around quite a bit more than a lot of folks realise”.

“The R&D to revenue in this industry is quite easily the lowest in the world,” Mr Joffe said. “As a proportion of what’s up for grabs for insurtechs, this is the least competitive space. It is very, very nascent. It’s the right place, the right time – it’s a fascinating space.”

While markets such as San Francisco were “ruthless” for startups – with “seven others including your hairdresser” pitching the same business ideas – he said Australia is “an incredible place to experiment”.

Globally, there have been around 35 multi-billion dollar “unicorn“ insurtechs, a trend that Mr Joffe expects to continue.

“Not only have we seen big break-out companies … but we’ve seen an acceleration of that and I don’t think it’s going to stop,” he said, adding that vast changes in technology, data and distribution are all coming together.

“It’s a really great time. There’s a lot of room to bring some ideas and do things that are very different.”

He advises that startups must offer something unique and transformative and be “more like a scientist” after an investor knock back and not “look for evidence that you are right”.

“The truth is the truth,” he said. “It either makes sense or not.”

Look for more InsurtechLIVE coverage in Monday’s bulletin.