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The rise and growth of the insurtech sector

James York, Founding Member and Co-Chair of Insurtech UK, is working to help the UK become a leading light of insurtech and insurance innovation. Here he outlines Insurtech UK’s mission and main objectives as they strive to transform the insurance industry through the use of technology. 

Q. Insurtech UK is classed as the voice of the UK insurtech sector as it aims to transform the insurance industry using technology, and ultimately position the UK as the global leader for insurance innovation. What are Insurtech UK’s objectives to achieve this? 

A. At Insurtech UK, we are the trade association for the community of insurtech start-ups in the UK. We are the largest formal insurtech alliance in the world, with a membership base of over 90 insurtech businesses, and a number of partners both from the traditional insurance space and industries which serve the insurance market. 

Our objectives are government awareness, collaboration within the insurance industry, and to drive further investment and confidence in insurtech 

Our key objectives are: 

• Promote the UK insurtech sector with government, Parliament, regulators, industry, and media. 

• Campaign for policy changes to drive the sector’s resurgence following Covid-19 and to help UK insurtech achieve its potential as the globally leading sector. 

• Deliver regular events and resources so members can share insights, learn best practices, and successfully build their businesses. 

• Connect members with investment and partnership opportunities in both domestic and international markets. 

In short, our objectives are government awareness, collaboration within the insurance industry, and to drive further investment and confidence in insurtech. 

Insurers need to create launch pads for start-ups to land on and engage with

Part of building an association is about having a platform upon which you can have discussions with stakeholders, so we meet multiple departments of government; we effectively engage our members to find out what they need, and fundamentally, focus on ensuring that we are offering more value together as a group for the common requirements, within competition of course, and that, individually, every start-up can deliver.

We want to make sure that people in government, key stakeholders, and those inside and outside of the insurance industry, are aware of this great community.

Q. How would you suggest insurers improve their digital strategy to match the increasing pace of digitisation and the accentuated need to collaborate with the insurtech ecosystem?

A. Quite simply. Small bets; lots of them; be prepared to lose money. If we’re talking about innovation, obviously no one wants to lose money, but it’s a case of creating a portfolio effect. There are so many good start-ups out there — engage with them in your digital strategy. Build an infrastructure of digital strategy that’s open and nimble; look to invest in ways to get to market with new start-ups as best you can. It is often easier to invest in a company that is building a great product than it is to build a product in-house when it’s not usually your core business line.

Insurers need to have an openness to how they work with technology, so my advice for insurtechs would be to try and create opportunities for people to trade remotely with you at very low operational and opportunity costs, something that Silicon Valley do incredibly well.

Q. Has the Coronavirus pandemic caused investment priorities for start-ups and insurtechs to shift? And what implications may this enforce on the sector?

A. Start-ups, typically using the model of venture capital, which a lot of start-ups are operating under, are designed to grow quickly. However, you need to build a model that can survive if funding does become affected by Covid-19.

I would argue that we are just at the start of the era of insurtech 

I would argue that start-ups will be looking at ways they can become much more attractive to investment and will use those insights to create more sustainable revenue streams a little bit earlier. It will be interesting to see if that model of growing and being able to absorb, maintain and tolerate losses perpetually until you exit or until your next fundraising round, is a safe way to go.

The investment rounds are the main route to getting that leap in growth that start-ups need. And that’s good for incumbents because the model needs proving, and we have a lot of consolidation going on in insurance at the moment.

In terms of what insurtechs are building, anything you’re creating has to be congruent with a Covid-world; it could be that your product creation is affected by Covid, something as simple as employer’s liability or terms of cover for unoccupied buildings insurance, these things are tiny little nuances but insurtechs in partnership with the industry incumbents can move pretty quickly to fill those gaps.

Insurers need to be able, willing, and ready to think outside of the box 

Q. What opportunities do insurtechs bring insurers and how might this help insurers reconnect with consumers?

A. Every insurtech that is selling a policy at the early stages is going to have less buyers, so the relationship and culture they build with their buyers is going to be very different to a 

company that is managing millions of people. That alone can be quite an interesting culture relationship — how does a start-up plan for scale? But starts with less? That’s one of the first things that insurtechs can bring in a distribution-sense. 

In terms of product creation, there is a willingness to be nimbler and more flexible, whereas for insurers, especially if they’re selling mass market products, have already got 99 problems and innovating probably isn’t one of them… Insurers need to be able, willing, and ready to think outside of the box. 

Insurers can work with insurtechs to test their ideas and products, and if things work, then great, and if they don’t, then find out what the learnings and outputs are. That for me is the main benefit of insurtechs. 

Q. What’s to come for the insurtech sector over the next 12 months? What trends are we likely to see? 

A. A lot of cynics have been calling peak hype on insurtech. I have got bad news for them; I think the insurtech sector is about to go to the next level. I think consolidation will create another level of growth that we have not seen before. 

There are people in the market that are now starting to get used to the benefits of insurtechs and are even willing to work with them or even extend regulatory authority, so my hunch for what’s to come for insurtech over the next 12 months? Much more and that that hype meets respect. 

Q. Any insurtech start-ups we should be on the lookout for in 2021? 

A. We need to be on the look-out for everyone. But there are remarkable examples, and the ones I would look out for, ironically, aren’t necessarily new. 

I am interested in those start-ups that have raised a certain amount of money and are now kicking on. It will be interesting to see start-ups that have been directly affected by Covid, and whether they come out of it pivoting. Unfortunately, as a founder, you know that even if you’ve got an iron clad product, the plan needs to survive reality. 

Look out for eco-system building, the markers are there. Look out for those break-out stories. No one company just because it’s further along or has raised more money is better than any other start-up, but there are some exciting individual stories out there. 

My final thought: the insurtech sector is like watching lots of people play golf. No one can take each other’s golf ball; they’re all in different points in their round and hitting different shots at different times, and that’s what makes start-ups so fascinating. But the common thread, of course, is what we can do to make everyone’s experience on their course as good as possible for buyers. 

James York, James York, Insurtech UK/Worry+Peace, author of article

James York | Founding Member and Co- Chair | Insurtech UK

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