Written by Tetiana George
After being away from Europe for nearly seven years, I had the opportunity to attend the ITC DIA conference in Barcelona this year. I was amazed to see how much the Insurtech world has grown during my absence. One of my final projects as a consultant in Europe involved a $600 million tender for Guidewire, but those times have now passed. The insurance industry is now heavily influenced by newly established insurers, Managing General Agents (MGAs), and various technology providers, which have streamlined the process of getting firms up and running within a few weeks.
During the past year, I served as a Board member of Insurtech Australia, and this experience has highlighted some significant differences between Europe and Australia in the insurtech landscape.
1. Europe has a lot more B2C insurtechs than Australia.
Europe is a vast continent with a massive consumer base of hundreds of millions, excellent regulatory alignment and a unified currency. In contrast, Australia has a population of around 25 million and approximately 2 million small and medium-sized enterprises (SMEs), operating in a highly regulated market with some variations among states.
In straightforward terms, European insurtechs are more focused on addressing consumer needs, such as offering health insurance solutions for expats. On the other hand, Australian insurtechs tend to concentrate on providing services that help large insurers, like automating damage assessment processes.
2. Rich and sophisticated funding ecosystem in Europe
In Europe, a well-developed ecosystem of startup funding exists, and they have a good grasp of the concept of “”insurtech.”” On the other hand, Australia needs a proper funding ecosystem, whether venture capital (VC) or corporate investments, making it challenging for insurtech startups to secure funding. Being an insurtech is not considered a common or usual business in Australia.
Despite being a relatively small country with a modest economy, Australia boasts many insurtech companies (90+). Still, only a few manage to attract external funding, and even fewer succeed in expanding their business overseas. Typically, Australian investors are more inclined to fund pre-seed to seed rounds, and they usually require international capital involvement for Series A funding in the insurtech sector.
In contrast, Europe enjoys a thriving ecosystem of investors, including VC firms, corporate entities, and angel investors, who deeply understand the insurance industry and closely follow industry trends. This dynamic ecosystem contributes to Europe’s more vibrant insurtech scene, offering higher chances of overall success and better opportunities for international expansion.
3. Broad definition of an “insurtech” in Europe includes companies operating not only in insurance but also in adjacent industries.
In Australia, an insurtech is typically defined as a company that uses technology in insurance or provides technology solutions for the insurance industry. However, this definition can be quite limiting, as it excludes companies operating in adjacent industries, such as the supplier industry for insurance or areas like disease prevention. On the other hand, European definitions of insurtech are much broader, encompassing companies that use technology at any point in the insurance value chain.
This broader definition allows European insurtechs to capitalize on the industry’s growth and attract significant investments.
During my month-long stay in Europe, I had the opportunity to reconnect with former colleagues and customers, which led to valuable insights and opportunities for Australian insurtechs:
Firstly, we must expand our market beyond Australia to achieve meaningful success. Our strengths in understanding sophisticated product needs, leveraging advanced technology, and navigating complex regulatory environments give us a competitive edge internationally. This enables us to access large markets like Europe, the US, and Asia.
Secondly, there is a need to educate local investors about the insurance industry and shift the perception of it from being merely a “”nice”” industry to a “mainstream” and essential sector. Organizations like Insurtech Australia can be pivotal in leading this effort and fostering a supportive community.
By embracing these lessons and opportunities, Australian insurtechs can position themselves for growth and success on a global scale, contributing to the overall advancement of the insurtech industry.
In conclusion, by learning from the European experience, Australian insurtechs can tap into international markets, foster a supportive funding ecosystem, and embrace a broader definition of their industry. These steps will pave the way for their success and growth both at home and on the global stage.
Check out these engaging photos from the ITC DIA conference in Barcelona!