Insurtech continues to be a pressure point for local insurers as developing technologies give way to new competition.
The latest Insurance Industry Report by TAS found that one in two industry leaders are concerned about the rapid rate of change in the sector due to disruptive innovation.
Statistics also highlighted that one of the key issues was not when to innovate as an industry but how, with 20 per cent of leaders indicating this as the biggest challenge they face in the year ahead.
Close to a third of leaders interviewed stated that legacy systems pose the biggest risk to business success and are seen to be holding companies back from embracing innovations such as telematics, dig data and robotics.
Leaders are further challenged by the industry’s negative reputation (22 per cent); tech-led disruption (22 per cent); and the rate of new market entrants (11 per cent).
In terms of investment, 61 per cent of leaders reported an increase in spending for the year ahead, while the remaining 49 per cent reported either no change, or a reduction in spending.
The areas in which insurers are investing most include: internal training and development; strategic partnerships with InsurTechs; and new technologies.
“Australia’s insurance industry is at a tipping point driven by disruptive technology and innovation. Insurers are concerned about the outlook and how best to adapt quickly rather than be left behind.
"Until now, insurers have felt that regulation would protect them from disruptive market forces – but that is no longer the case. In the year ahead, we will see further consolidation.
"The insurers who prosper will be those who get behind innovation, drive strategic partnerships with InsurTechs and challenge themselves to continually innovate and better service customers,” said TAS CEO Shane Baker.