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Digital Disruption in the Australian Insurance Industry

By Academy Xi

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“Cyber insurance is the fastest-growing commercial segment in the Australian market”

Although the Asia-Pacific region currently accounts for just 14 percent of insurtech companies—with the US, the UK, and Germany leading the way—it is expected to be the fastest growing region in the next few years. The demand has arrived, and it’s time for industry leaders to step up to the plate. 

The first order of business is to start thinking more holistically about your services. McKinsey sees insurers as important players in the “ecosystem landscape,” which will account for 30 percent of global revenues by 2025. An ecosystem in consumer terms is a product or service that “allows users to fulfill a variety of needs in one integrated experience,” focusing on needs such as travel, healthcare, and housing. 

“Seven of the ten largest companies by market capitalisation—Alibaba, Alphabet, Amazon, Apple, Facebook, Microsoft, and Tencent—are ecosystem players, and that only hints at the power of digital,” write McKinsey senior partners Tanguy Catlin and Johannes-Tobias Lorenz. 

To succeed in this climate, insurers will need to reconsider their roles and business models and “evaluate opportunities to partner with players in other industries.”

Digitalisation will primarily impact the distribution, underwriting and pricing, and claims functions of the insurance process itself. C-suite and HR managers will need to be prepared. This article outlines key areas of disruption and features insights from some of the top experts in the field in both Europe and Australia. 


Key Areas of Disruption

  • Distribution

Customers will be able to purchase policies in minutes, even seconds. Blockchain-enabled smart contracts will help prevent fraud while allowing instantaneous authorisation of payments. Products and services will be highly personalised, which means agents will become “facilitators” or “product educators.”  


  • Underwriting and pricing

Underwriting can also happen in a matter of seconds, thanks to automation supported by machine-and-deep-learning-enabled technologies. Proprietary platforms will connect insurers and customers and offer experiences and features tailored to individual needs. 


  • Claims

Again, things will get faster. Claim processing times will be reduced to hours or even minutes, and carriers “achieve straight-through-processing rates of more than 90 percent.” Data-capture technologies like drones “will replace manual methods of first notice of loss. Customer interaction with insurance-claim organisations focuses on avoiding potential loss.” Beyond these processes, there are a few other industry trends to stay aware of. 


  • Global ownership

According to PwC Australia Insurance leader Scott Fergusson, we are starting to see a trend toward more global ownership of many insurance businesses. For instance, of the top 15 of general insurers, just two are owned by non-general insurers. 

“Before NAB sold its majority share of MLC, there were five life insurers in the top 15 that were owned by non-life insurance companies,” Fergusson says. “That number is likely to reduce closer to two or three over the next few years, leading to most significant life insurers in Australia being foreign owned, as it becomes more specialised.”

Global ownership will lead to “greater investment and innovation in the industry,” and could also bring “lower return on capital thresholds, which will fuel further competition in the market.”

Ultimately, the majority of companies in the near future will be owned by overseas businesses, which raises some questions for business owners on Australian soil: “The question for Australia and the industry is, what does that mean for us as a nation if all of the major service providers are foreign owned? Given these life companies are regulated individually in Australia, it is unlikely to have a big impact, but philosophically and mentally it is an interesting development.”


  • Customer-Centric

The best way to add value to your service is not to digitise for the sake of digitising, but to leverage digital tools and functions to provide a better customer experience. Consumers want low cost, convenience, and low intrusion. They also want the ability to control their own data, the satisfaction of having their needs met by insurers and brokers alike, and the capability to self-manage. 

Fergusson notes that, to maintain profitability, “insurers have continued to focus on cost management initiatives through the automation and simplification of key processes, exploring off-shoring and outsourcing arrangements and undertaking large scale transformation programs.” But if companies want to be innovative, he says, they have to transform the way they engage customers.

“Gone are the days of only interacting with a customer when they buy the policy or make a claim. Rather the focus is on ongoing engagement throughout”

This is a strong case for integrating service and UX design practices throughout your company operations. How can you create a personalised, transparent, and seamless experience for each customer? 

Building trust will be a key investment in the years ahead. For instance, companies that focus on preventative service, rather than reactive service alone, will have an advantage over competitors.  

“Insurers are seeking opportunities to prevent claims in the first place, instead of just being reactive,” he says. “A classic example is life companies using technology to improve a customer’s experience through offering fitness tracking adjacent to their life policies.” 

2020 will be about rebranding towards greater transparency and trust. 

“We’d like to see the brand of insurance, not just the brands of insurers, being reinstated as a really important part of the way Australians look after themselves, their loved ones and their assets.”

  • European Aggregators 

McKinsey estimates that around 50 percent of online insurance in Europe is sold through aggregators—digital brokers and specialists who connect customers and insurance providers. 

“Customers increasingly use aggregators both at the start of their buying journeys, to get an overview of the market, and at the end, by purchasing directly from the aggregators rather than the product providers”

For some insurers, these aggregators threaten to disrupt their current business models. For others, they’re simply the customer-facing side of their business. It’s crucial to know your relationship to these aggregators, and which relationship you’d like to have, as you prepare your company for the future.

  • Advanced Analytics and IoT

Data analysis will be crucial in the years to come. Your company will need to fine-tune its ability to analyse big data and social media in order to gauge customers’ current needs, life changes, and risk preferences. Customers will expect more personalised product design, more accurate pricing, and more efficient claims management.   

According to Ernst & Young, for insurers this means “actionable insights into customers’ mindsets to help improve offerings, customer service, better risk-pricing strategies and growth.” For brokers, it means “enhanced capability to justify value to clients and retain customers.” 

These processes will require advanced analytics and a familiarity with the Internet of Things in order to understand rapidly shifting risk profiles. What’s more, customers “expect personalised solutions that meet their specific needs, given the volume and real-time nature of available data.” 

Emerging technologies to keep in mind are telematics, wearables, autonomous vehicles, and connected homes. These technologies will inevitably raise the demand for new forms of coverage and new means of delivery. 

  • Employee Development

One of the most significant changes insurance companies will need to make is within employee culture. As basic processes and functions go digital, customers will want more from the user experience itself, which means employees need to deliver a different level of service. 

“Carriers have an opportunity to differentiate themselves by providing an excellent customer experience across multiple points of contact and moments of truth”Michelle Canaan and Kelly Cusick for Deloitte Insights. 

Enter employee development. As the customer experience becomes increasingly central to the future of insurance, C-suite and HR managers will need to know what that experience looks like and how to train employees to provide it to their clients.

“Making these changes would require internal multifunctional teams to work more seamlessly,” Canaan and Cusick explain. “Firms might also need to align themselves with external business partners, such as data vendors and service providers, as ecosystems of product and service offerings become more integrated.”

First, how can leaders reinvent organisational culture to attract the right talent? 

“To attract the skill sets necessary for product development modernisation, insurers should find ways to vastly elevate their appeal to make a career in insurance more relevant and attractive to innovative and tech-savvy individuals.”

According to a recent survey, only 4 percent of millennials are interested in pursuing a job in insurance. However, as the average age of an employee in the insurance industry is 59, there will be a huge void to fill as this generation retires—by some estimates, vacancies to the tune of 70,000 positions, including upper management.  

The question is, how can HR managers and industry leaders change people’s perception of a career in insurance? 

“In acquiring innovative skill sets, you need to think about it in terms of, How do I become the greatest place in the world to work, what’s my value proposition to talent, and how do I enable them to have a great career and be successful?” write Pew Researchers Lee Rainie and Janna Anderson.

Canaan and Cusick at Deloitte suggest starting with initiatives to modernise company culture.

“Leaders can demonstrate a commitment to innovation, diversity, and social impact through related incentives and career development opportunities. If handled successfully and holistically across the organisation, these efforts can help convince those with cutting-edge skill sets that a career in insurance can immerse them in an intriguing, exciting, diverse, and innovative world of risk solutions”

Specialists from Montoux’s Insurtech Channel agree:

“It’s sometimes easier to attract someone to a job and team rather than an industry,” says Montoux’s Geoff Keast. “Montoux organises jobs around clear, intellectually stimulating missions and goals, and this is clearly communicated in the hiring process. It also emphasises the importance to teamwork, creating a ‘with’ instead of ‘for’ environment.”

Doing this gets potential hires excited about a position. Demonstrating how an individual can grow and contribute in areas like data science, sales, branding, software development, and marketing helps candidates envision themselves in that position.”

The industry already has a few things going for it, including potential for professional growth, job stability, competitive salary, and work/life balance. 

“Communicating this in the hiring process or through existing employees and company channels is an important step in the right direction” – Geoff Keast, Specialist from Montoux

Aside from attracting new talent, one equally crucial step toward the future is transforming the capabilities of existing employees. 

How can managers predict what services customers will want and upskill employees to be able to meet that demand? Will certain roles become redundant? What will be the upsides and downsides to digital transformation within the insurance industry? We’ve spoken with several experts who have some compelling ideas on the subject.

Insights from the Experts: How Can Leaders Prepare? 

Roman Neumann, Digital Transformation Expert 

Berlin, Germany 

Innovation strategist and digital transformation expert Roman Neumann, whose background ranges from banking consulting to change management, says the future is here, but people’s mindsets are not. 

We spoke with him first generally about digitalisation, then more specifically about insurance.

“We are already in the digital age, but people are not really accepting that it’s already here”

There are two reasons for this, he says. The biggest reason is fear. The second reason is lack of direction. Say you’re a truck driver facing automation, without a clear career alternative. What should you do? 

Neumann’s attitude is a realistic one: “You will have winners and you will have losers in the game.” Some of us will simply have to adapt, to do things we aren’t necessarily qualified for yet. “People have to do something else.”

There are countless examples throughout history of when jobs were replaced by new technologies, he says, for instance horse-drawn carriage drivers suffering displacement as automobiles became more mainstream.  

At the same time, it’s not the sudden revolution the media likes to suggest.

“We tend to overestimate the short-term impact and underestimate the long-term impact of new technologies,” Neumann says. “We say, ‘Okay, I’m panicking because digital disruption will disrupt the whole business, but that doesn’t usually happen.”

It’s more of a gradual process with fundamental and lasting change. 

For insurance industry leaders and HR managers, Neumann says training your team to be open-minded is paramount.

“How open is your organisation in terms of change, mindset, culture? Is your workforce able to adapt? Are your leaders good ambassadors? What’s my long-term plan? Is the strategy and management plan future-based? Is it possible to earn money from this in the future?”

HR must lead this transformation. “What skills are needed to recruit the right people and to educate people with soft and hard skills?” It may not be easy, but Neumann emphasises that all of the above questions are connected, which means that targeting all of them will create a more positive impact in the long run.   

Looking at the trends among more than 500 insurance companies in Germany, Neumann sees a major shift toward the customer. “What I see here is that [companies] understand that digital disruption is needed because the customer requests it. There’s a push from the outside, so companies will wake up soon.”

The role of insurance companies will change. In Germany, only six percent of companies have gone completely digital, but it will soon be the case that few customers will want to go to a physical location. 

“Now you take a video, a photo of the damage, send it to an address with your customer ID number, and no one has to come. They transfer you money and you can do it all from your smartphone.” 

It’s these kinds of services that company leaders should focus on developing. That is, services focused around customer needs. They’re services that require strong soft skills, allowing employees to understand the needs and processes between customers and insurance companies. The role of the mediator, he says, is a growing field in insurance market. 

David Wisemantel, Recruitment Specialist in InsurTech 

Sydney, Australia

Next, we spoke with David Wisemantel, who specialises in disruption in recruitment.

“Personal Insurance is seeing advances in digital for two reasons. Tech providers have built advanced claims platforms, making insurers a lot more efficient in processing claims. This includes a lot of automation. Second, insurers now have the ability to better assess the risk of policy holders through big data and the appetite for the market to make PI policies customisable to the policy holder’s situation. (Think health testing, genetic mapping for health/life insurance etc.). Also, blockchain technology is playing its part in reducing fraudulent claims. I think GI will see more disruption. Driverless cars and similar technology will reduce the need for people to insure property like they have in the past.

Naturally, roles like claims support will be less relevant. I think front end sales types roles will also decrease significantly. There is huge demand for technical roles now, like developers. Most of these companies build in a .NET or Java back-end tech stack. Re-skilling in this area is a pretty big leap for someone coming from claims support but that’s where the demand is coming from.  To recruit for in-demand areas (depending on the size of the company), companies need to become more competitive as employers. Talent drivers in this space include salary, work from home, employee share schemes, culture, career advancement, etc. There are a lot of companies who ‘claim’ to do this. You actually ‘have’ to do this, though.”

Andy Jamieson, Founder & CEO of Advisr 

Sydney, Australia

Andy Jamieson, CEO of Advisr, which focuses on the Australian insurance marketplace, shared the following insights about disruption. 

“Firstly, I see that technology is more empowering and enabling for brokers and customers. Second, brokers will need to continue to evolve from distribution only to strong personal advice—that is one real area brokers can deliver value and win customers.

Brokers need to move beyond product understanding and distributing insurance and to more business-client-centric and reviewing and understanding risk. Insurance is a key part of the process, but I feel it needs to be more. Maybe process changes and improvements that reduce risk and reduce insurance premiums.”

Skye Theodoru, Co-founder & CEO at UpCover

Sydney, Australia 

Skye Theodoru, entrepreneur and project manager, advises the following:

“Encourage employees to upskill in emerging trends, business models, and technologies. This could be done by supporting employees and encouraging new projects, in addition to their existing work, or when they start a side hustle if it’s paid or unpaid, by even allowing them to cut back to part-time. I was always encouraged to work in this manner in my corporate roles, and it’s made adapting to starting my own insurtech full-time that much easier. The jobs of the future will be so varied anyway, it makes sense to start now. Manual or process intensive tasks over time will be streamlined, and are already. It means the workforce can now focus on relationships and creative and strategic thinking.”

Rita Yates, CEO at InsurTech Australia

Sydney, Australia

Rita Yates, who has worked for Allianz and Stone & Chalk and now helps insurtech startups grow, recommends broadening your perspective by gaining experience from outside the insurance industry: 

“Insurance professionals of the future will likely need to have broader expertise, lateral thinking and skills which will often include tech skills rather than deep knowledge and expertise in one specific area of insurance alone. To create a culture of innovation, insurers will need to hire talent that understands how to work in a test-and-learn environment and be open to change. Having broader experience outside of the insurance industry alone will also potentially bring fresh ideas and perspectives into the business.”

Jennifer Harrison, FinTech Consultant

Sydney, Australia

Jennifer Harrison, an advisor with experience in fintech, insurtech, and edtech, says company culture is key:

“A lot of the time, employees are in ‘eyes down’ mode delivering against tasks. Whilst this gets today’s work done, it is not conducive to discovering longer-term challenges. Innovation shouldn’t be outsourced to an offsite corporate lab divorced from the day-to-day business. My recommendation is to ensure that every employee periodically participates in a facilitated group session where the focus is ‘eyes up.’ Your employees know your business and your customers the best. When they are supported to be creative and curious, and to imagine the possibilities of the future, you will discover many amazing insights that were hiding in plain sight just waiting to be seen.

You should involve everyone in your digital transformation through facilitated workshops (e.g. along Design Thinking principles). In this way you are upskilling because everyone learns to be ‘eyes up’ at least from time to time.”

Nigel Walsh, Partner at Deloitte & Co-Host at InsurTech Insider

London, United Kingdom

Representing the UK market, Nigel Walsh share the following insights:

“I think like every industry we are going through massive change, probably more so here than any other given you could argue we are further behind the curve. People often perceive our industry to be slow and out of date. But that’s just not true. Insurance isn’t sitting back on its laurels. As my InsurTech Insider co-host Sarah said, ‘We have drones and self-driving cars… find me someone else who can top that.’ 

Globally, InsurTech has had over 30bn of investment with over 4,000 startups worldwide. Close to home, the InsurTech Australia scene is thriving with folks like CoverGenius just nailing it along with incumbents partnering or creating their own thing, for example with Trov or indeed Poncho as set up by the great team from IAG Phil Wilson-Brown and Marcus Verrall. The future is very bright in insurance and it’s not too far you have to scratch to find it.”

“If I could paint an ideal future,” Neumann told us, “we wouldn’t even have to work anymore. We’d do what we are supposed to do: socialise, help each other, be creative, make art, philosophise. Not to drive trucks and spend ten hours in the office.”

We can think of the future of insurance this way as well: Disruption is an opportunity, not a burden. It will allow us to live easier lives and focus on what matters. If industry leaders keep this in mind, transforming organisational culture in line with these values, the right talent will not only come running, but stick around for the long haul.