Australian insurers made significant progress in embracing digitalisation by focusing more on the customer and by building an underlying innovation framework, said a recent industry report by TAS, an Australian technology services provider for the financial services industry.

First launched in 2017, the TAS Insurance Industry Report draws upon in-depth interviews with leaders from a broad range of private and publicly listed insurance companies which were conducted between October and December 2018. The report seeks to serve as an independent assessment of Australia’s insurance industry.

The report noted that customer experience is the most important business priority in 2019 for 25% of leaders interviewed, followed by AI and big data (12%) and differentiated products and services (12%). In fact, interviewees for the report said that they will measure their success in the year ahead mainly through customer-related performance metrics including satisfaction and retention.

Aside from focusing on customer experience, insurers have positioned innovation highly on the 2019 agenda, with 90% of interviewees stating it as their most important business capability in the year ahead. This marks a shift in attitudes in comparison to the 2018 TAS insurance industry report which found that 50% of industry leaders were concerned about the impact of innovative disruption.

“It is very encouraging to see Australia’s insurance industry progress the way it has over the last 18 months with many insurers embracing disruptive technology and innovation. Australian incumbents have received a wake-up call and are paying attention. This is great news for the consumer who will benefit from the strong customer focus that insurers have,” said TAS CEO Shane Baker.

According to the report, insurers are also starting to understand how they can innovate in order to remain competitive. Eighteen per cent of interviewees are now building an innovation framework by investing in strategic partnerships.

While more insurers embrace digital change, the report also found that one of the biggest challenges facing the sector is lacklustre investment in technology with only 18% of interviewees investing in developments such as RegTech.

The lack of investment in technology was highlighted in the 2017 report as well, making it a significant challenge facing the Australian insurance sector.