Body
InsurTech is composed of the words “insurance” and “technology”. It is used as a collective term for the application of modern technologies in the domain of insurance services.
Digital and mobile brokers: FinTechs belonging to this category mostly act as digital insurance brokers and provide users with an overview of their insurance contracts with their respective conditions. Some FinTechs offer very short-term insurance contracts to cover specific cases which can be concluded often spontaneously via mobile devices. Oftentimes additional consulting services are offered.
Internet of things: FinTechs belonging to this category collect data by measuring for example the driving style of the customers or through wearables the customers wear to consult on, offer and/or manage the customer’s insurances.
Introduction
Attitude of the country towards InsurTech-services
InsurTech services are becoming more embraced as they present the opportunity to change insurance customer experiences by offering more personalised policies, on-demand services, and greater flexibility to the consumer. Whilst the benefits of this service are known, it is not commonly used by Australian insurers.
Legal affairs
Obligations and requirements to provide InsurTech-services
There have not been any specific changes to legislation or regulation due to differences between technology and traditional offerings.
InsurTech companies are subject to the same requirements as general insurance companies. This includes holding a current AFSL and complying with the requirements of APRA and Anti-Money Laundering regulation.
APRA requires any corporation conducting any business that may be classed as insurance business will require a licence, under the Insurance Act (Cth) 1973. InsurTechs will be required to apply and receive an APRA Licence.
Additional comments regarding the legal situation for InsurTech-services or what InsurTech’s must be aware of in this business area
Where an InsurTech business partners with an existing insurer, they will likely not be required to hold an APRA licence. They will still, however, require an AFSL.
Economic conditions
Market size for InsurTech-services and biggest companies in this business area
The investment within InsurTech services in Australia is relatively small. Approximately $150-200 million was invested into InsurTech in 2021 according to Tiger Financial Group Executive Solai Valiappan. This formed only 5-10% of the overall investment into FinTech during the same period. The market for InsurTech is still nascent, particularly compared to other jurisdictions including America and Asia, where this technology is more readily utilised.
Additional comments regarding the economic situation for InsurTech-services or what InsurTech’s must be aware of in this business area
InsurTech forms a small proportion of FinTech’s total market in Australia, making up 3.1% of the marketplace.