Australia: Digital disruption in insurance

Insurance update
Last Updated: 28 July 2015
Article by Matthew Ellis

Innovation and disruption are in reality two sides of the same coin (or Bitcoin, if you will). On one side, innovation may describe the driver of change, the creative thinking and ideas that lead to new technology, new methodologies and new approaches. On the other side, the by-product or necessary consequence of innovation is change to the status quo, the uprooting of traditional models and incumbents and the disruption of markets. And so in one sense, the much hyped concept of "disruptive innovation" might be seen as no more than a descriptor of human advancement. But there is a reason the expression has become the catchphrase of this generation of tech-savvy organisations; and that is because organisations are seeing disruption not merely as the consequence, but as itself a driver of innovation. Where markets can be disrupted, there is opportunity; and so organisations these days are quite proudly identifying themselves as disruptors as much as they are innovators.

The insurance industry is not shielded from disruption, and in fact has been subject to significant disruption in a number of forms already. In this age of the digital economy, it may be that the insurance industry is on the brink of even more seismic change. This article identifies current disruptive innovations affecting the global arena and discusses some potential areas where disruptive innovations have the potential to reshape the industry.

The key to digital disruption

The term "disruptive innovation" has only gained popularity since it was used by a Harvard Business School Professor, Clayton Christensen in his book called "The Innovator's Dilemma". Disruptive innovation is described as innovation that creates new markets by appealing to new categories of consumers. One aspect of disruptive innovation is the implementation of new technologies, but alternatively, it may involve the development of new business models and exploiting old technologies in new ways.

A major difference between innovation historically and disruptive innovation, as the expression is used today, is the digital aspect of the current surge of innovations. Innovators have capitalised on the availability of mass marketing through the "Internet of Things" and global connectivity and the collection and use of massive amounts of data and information stored on the internet. The expression digital disruption has been coined to describe this most recent movement.

Disruption in the insurance industry

Disruption has been occurring at pace in different forms in insurance. Alternative capital models have encroached on traditional reinsurance markets and are growing ever more popular. Technological advancements such as the use of telematics have encroached into traditional underwriting processes. Online platforms have encroached upon traditional broker-led distribution channels. Nevertheless, it feels as though we are on the cusp of much bigger and more significant change.

There are countless articles on the news every day about new innovation "disrupting" a myriad of service and product based industries including Uber, Groupon, Airbnb, Netflix, iTunes or Spotify, Skype and more recently, "Driverless" or autonomous cars. What these players have been able to capitalise on is the ability to reach the mass market, process sales quickly and target sales to appropriate markets. It may seem that these innovations are far removed from the insurance industry; but when you imagine targeted distribution of insurance products on the scale that the above players have achieved through digital markets, it is easy to see the opportunity and the potential scale of disruption.

Aggregator or price comparison websites

Price comparison websites allow consumers to filter and compare products based on price and other features. These websites have penetrated various markets worldwide. In Australia, websites such as iSelect,, Choosi and Canstar are providing comparison data for health and life insurance and motor vehicle insurance. Although they have been resisted by the large insurers and have therefore caused less disruption in Australia than in other markets, they continue to pose a threat to the status quo.

Aggregators have broad appeal due to the perception that they offer consumers the ability to compare products and identify the cheapest insurance option. That appeal means aggregators are becoming the consumer's first port of call on insurance purchases and as a consequence, in international markets we are seeing aggregators become significant competitors to traditional intermediaries.

This distribution channel is one that is now attracting the biggest digital disruptors. In 2012, Google entered into the insurance industry in the UK by launching a price comparison site, providing comparisons on car insurance, travel insurance, credit cards and mortgages. In March this year, Google entered the insurance industry in the US by introducing 'Google Compare for Auto Insurance'.

Where else for Google and other disruptors?

It is unsurprising that a great disruptor like Google is seeing the opportunities in insurance. It has the scale and the connection to customers to achieve mass distribution of insurance products.

However, intermediating insurance may only be the start. It can be said that the success of an insurance carrier depends on the skill of its underwriters. An underwriter's skill is in identifying and pricing risk based on the information provided by its prospective clients. The amount of data collected by the big digital disruptors is staggering. Their ability to filter and utilise that data to personalise and direct marketing is well known. If they are able to utilise information on which sophisticated and automated underwriting could be performed, then the next disruption will impact insurance carriers directly.


Maybe the slogans of disruption and innovation are starting to sound more like spin than substance; but it would be unwise to be dismissive. Digital innovation is quietly, and quickly, shaping the insurance market globally. Insurance CEOs around the world are talking up the importance of keeping ahead of technology and abreast of developments in disruptive innovations. It is therefore vital for current players in the insurance industry to remain aware of potential disruptors and plan ahead to adapt to the inevitable changes the digital market will bring.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Matthew Ellis
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.