Startups, corporates and insurance industry professionals have come together to create Insurtech Australia, an insurance industry association designed to support startups and industry innovators working in the insurance sector.
Created as a standalone division within fintech industry association FinTech Australia, Insurtech Australia is a national not-for-profit organisation that will seek to uphold the needs of startups and companies working to create tech-enabled innovation in the insurance sector.
Brenton Charnley is the co-founder and lead of Insurtech Australia, as well as the co-founder of career development startup Vitae.Coach and founder of the Alpha39 Innovation ‘insurtech’ advisory group. Leveraging his past knowledge of Australia’s startup landscape, Charnley says the new association was formed to help Australian insurtech companies succeed on a global scale.
“If we can help people understand the [insurance] game and understand the rules, then you can get better opportunities and more players to play the game,” Charnley tells StartupSmart.
Charnley refers to data from CBInsights that shows insurtech startups attracted around $US1.69 billion ($2.2 billion) in investment in 2016, but only 1% of this funding went towards Australian startups.
He says he now wants to see Insurtech Australia build Australia’s insurance innovation ecosystem to foster more new entrants to the space, create more funding opportunities, and support existing industry players.
Charnley admits it’s still early-days for the sector, which currently has about 30-40 players operating in the space, but this is something he also wants to see change in the future.
“It’s about vocalising, educating and providing awareness to the tech community about the opportunities in the sector,” he says.
Charnley says the decision to launch the association under the FinTech Australia umbrella was made to leverage the existing relationships and existing regulatory progress the body had already secured.
“We deal with the same regulators and there’s many overlaps – we have similar corporate partners. It didn’t make sense to set up a standalone association,” Charnley explains.
“We’ve been working together with [FinTech Australia chief] Danielle [Szetho] and FinTech Australia as we talk to ASIC about shifting the needle as a financial services community by working together.
“We are all proponents of tech in the financial sector, and we want to see the fintech community coming together around the common thread running in the insurtech space, which is enabling not disrupting,” he says.
Founding members of the insurtech ecosystem include a range of startup industry players, technology moguls and fintech corporations, with launch partners including Tank Stream Labs, York Butter Factory, FinTech Australia, Stone & Chalk and the Australian and New Zealand Institute of Insurance and Finance. The association already calls the likes of Smart50 winner Cover Genius and artificial intelligence-enabled fintech Flamingo among its founding startup members.
Corporates partnering with the association include QBE, Macquarie Bank, Ernst & Young and Suncorp.
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Startup members of FinTech Australia that are operating in the insurtech space will be granted immediate membership to Insurtech Australia, according to the association, while corporate partners and industry members can join Insurtech Australia separately.
Opening up Australia’s fintech sandbox
Insurtech’s formation announcement earlier this week came on the same day that Treasurer Scott Morrison released details of draft legislation and regulations for the establishment of an enhanced fintech regulatory sandbox in Australia.
The draft regulations will open the regulatory sandbox further to allow a broader scope of fintech activities to be tested, without the need to meet all the existing licensing requirements laid out by the Australian Securities and Investments Commission (ASIC).
These draft regulations would allow companies to allow companies to test services and provide financial advice in relation to offerings such as life insurance, superannuation, and domestic and international securities.
Charnley says it is “serendipitous” that the Treasurer’s announcement coincided with the launch of Insurtech Australia, but adds these regulatory changes were not as a direct result of the association lobbying regulators.
“It’s just good timing: the sandbox is one of the first stepping stones to insurtech regulation success,” he says.
Charnley heralds the changes as an important step forward for insurtech in Australia, noting that the original parameters of the fintech sandbox were “too narrow” and provided “very low insurance [testing] limits”. This saw insurtechs operating within the sandbox confined to advising customers on general insurance claims of a maximum of $50,000 when conducting testing for new insurance products and offerings.
Going forward, Charnley says Insurtech Australia will now be working with regulators to propose an even wider scope of insurance-related offerings to be allowed in the sandbox, while also lobbying for an increase in the financial limits placed on the testing of insurance products within the sandbox.