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Insurtech UK launches strategic policy manifesto for sector growth

Insurtech UK has unveiled its Policy Manifesto, aiming to strengthen the UK’s insurtech sector.

The manifesto outlines strategic recommendations for regulatory reforms, investment incentives, and growth facilitation to maintain the UK’s leadership in insurance innovation.

  • Editorial Team
  • June 26, 2024
  • 4 minutes

Insurtech UK published its Roadmap of recommendations for policymakers to retain and enhance the UK’s leading global status in insurance innovation on 25th June 2024.

Insurtech represents a dynamic growth sector with substantial potential in the UK and beyond, leveraging the latest technology to improve traditional insurance products and processes. The UK is already home to the world’s second-largest insurtech cluster, with an estimated combined value exceeding $20 billion. The industry supports 60,000 jobs nationwide, contributing nearly £5 billion to the UK economy.

Through its trade association, Insurtech UK, the industry is working collaboratively to cultivate a proactive ecosystem that supports UK start-ups and scale-ups. However, to fully realise the UK’s potential, this energy and expertise must be complemented by a supportive policy environment.

The Roadmap details how the next government can pave the way for UK insurtech to thrive through:

  • A regulatory regime that enables more new entrants
  • An investment environment that facilitates funding
  • Actions to unlock opportunities to scale

With the UK’s insurtech credentials firmly established on the global financial stage, now is the time to further support these innovative firms in their drive to internationalise. Accessing higher levels of overseas investment and entering new markets will accelerate the next stage of the UK insurtech sector’s exciting global journey.

Key recommendations within the Roadmap include:

Regulation and digital transformation

A regulatory regime that enables more new entrants

Recommendation 1: The Prudential Regulation Authority (PRA) should maintain momentum in evolving the regulatory regime to the needs and structures of insurtechs as they start and scale, including:

  • A swifter, more transparent application process for PRA authorisation
  • Clear guidance and communications as the new PRA mobilisation regime is introduced and embedded, with a commitment to be in place by the end of 2024

Recommendation 2: The Financial Conduct Authority (FCA) should work closely with the insurtech industry to ensure the ongoing availability of, and confidence in, a proper Appointed Representative scheme which allows market access for start-ups and enables future innovations in embedded insurance.

Recommendation 3: Regulators should adopt a progressive, enabling approach to emerging technologies such as AI, blockchain, and Open Finance, considering how these can be best applied within an insurance context to maximise consumer benefit and confidence

Access to finance

An investment environment that facilitates funding

Recommendation 4: HM Treasury should extend the Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) to all categories of insurtech to incentivise more investment into this high-potential sector and prevent a cliff-edge when Managing General Agents transition to regulated insurance firms.

Recommendation 5: HM Treasury should significantly extend the qualifying criteria for the Enterprise Management Incentive (EMI) from its current limit of £30 million gross assets to attract more experienced talent as insurtechs scale.

Recommendation 6: HM Treasury should re-extend the long-stop date for Advance Subscription Agreements back to 12 months, removing the additional pressures on concluding accelerated funding rounds that reducing this to 6 months has created.

Recommendation 7: An urgent review of the HMRC R&D credit scheme should be conducted to provide clarity, consistency, and confidence in both the application of scheme criteria and scheme administration.

Recommendation 8: The value and positive impact of Innovate UK’s Professional and Financial Services programme supporting research and development in insurance should be recognised and expanded by HM Treasury in future spending rounds.

Barriers and growth

Targeted action that unlocks future potential

Recommendation 9: HM Treasury should introduce a fairer VAT/IPT regime, enabling insurtechs to scale quicker and compete on a level playing field with other tech sectors.

Recommendation 10: The Department for Business and Trade should develop a three-year strategy for the international promotion of UK insurtech. This strategy should facilitate access to key overseas jurisdictions and encourage inward investment, drawing on evidence of priority countries and positive past experiences with insurtech corridors and fintech bridges.

Recommendation 11: New government-backed reinsurance schemes (Innovation Re) should be scoped by HM Treasury to enable coverage of new societal risks or act as a backstop for new accessible and affordable insurance policies, providing greater financial inclusion in insurance.