London woos insurtechs, brushes off Brexit worries

The UK government is keen to attract insurtech firms to London and create an environment where they can thrive as part of its plan to keep the city a global insurance hub.

Due to the uncertain outcome of the Brexit negotiations a number of UK domiciled re/insurance firms have been applying for licences to operate from EU locations such as Dublin, Luxembourg or Brussels in an effort to make sure they can service EU clients after Britain leaves the EU.

But London is expected to remain a major re/insurance hub nevertheless and the government hopes to give the sector a boost by promoting insurtech developments. In February, the HM Treasury-supported Fintech Delivery Panel created a new subgroup focused specifically on insurance technology and innovation to promote the UK insurtech agenda and help insurtech companies to scale up and compete on a global stage.

The new insurtech subgroup includes representatives from insurtech startups, incumbent insurers and key market bodies including the Association of British Insurers (ABI), Lloyd’s of London, the London Market Group (LMG) and the British Insurance Brokers Association (BIBA).

The new insurtech board aims to establish a common vision for insurtech in the UK in order to position the UK as the best environment to start or locate an insurtech business.

“London is a really important financial centre, and we would expect that to remain the case in the future as well,” said Trevor Maynard, head of innovation at Lloyd’s and a member of the insurtech board.

“We think that insurtech, both in the UK and from outside the UK, will be very keen to come to London and the country in general. They will want to work with companies that have a large global footprint, which a lot of the insurance players in London have.

“We see that global relevance and footprint will continue in the future,” Maynard added.

The insurtech board wants to create a standard for collaboration between insurtechs and incumbents through the development of legal frameworks. “The members of the board that’s been created have their own networks that can help to bring the right parties together,” Maynard said.

“The board is keen to ensure that insurtechs feel empowered in terms of collaboration with incumbents,” he noted. The group will do some of the work for them and take some of those frictional costs out,” he added.

After an insurtech firm did a proof of concept and worked on a project the next step is often to scale up in partnership with an incumbent. But that process often causes unwanted friction.

“Currently there is a lot of red tape and bureaucracy, and all the sorts of things that large companies have to deal with,” Maynard said. “You get a mismatch between the way that these small, agile companies operate and their larger incumbents,” he added.

The insurtech board wants to make this process smoother, drafting documents for insurtech firms to speed up the process.

The board also wants to support the development of UK-based talent to ensure the sustainability of the insurtech community in the UK. Furthermore, it wants to make sure that the UK offers an attractive environment for the insurtech scene to thrive.

“Regulators in the UK are already stimulating innovation. For example, the FCA sandbox has been running for a couple of years with many successful outputs,” Maynard said. In order to ensure that there is flexibility around innovation in the UK, the board members will make use of their influence as experts in several areas of the insurance market.

“The insurtech board is exploring how to work with regulators as they are an important part of the ecosystem,” Maynard said.

The backing of the UK government and help from the department of international trade will support the board to achieve its goals. The attractiveness of London as a financial centre is also set to facilitate the work.

“One of the key points is having that close proximity to the large companies that operate there. London has fantastic synergy - so much happens in such a small area. For insurtechs to be part of that, they will find it easy to get access to people and to try their products out on insurers’ customer bases,” Maynard said.

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