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Insurers increase appetite for innovation as industry joins FinTech Pledge

Insurers increase appetite for innovation as industry joins FinTech Pledge

Banking & FinanceEuropeTop Stories

In celebration of UK FinTech Week, Tech Nation, the growth platform for tech companies and leaders, has announced new signatories of the FinTech Pledge. The FinTech Pledge, supported by HM Treasury and developed by the FinTech Delivery Panel, sets world-leading standards to accelerate the growth of the UK’s FinTech sector by promoting valuable partnerships between financial institutions and tech scale-ups.

In a move broadening the pledge, six new signatories from the insurance sector – Admiral, Aviva, Brit, esure, Lloyd’s, Munich Re Digital Partners – plus Investec who joins as an additional signatory from the banking sector – demonstrate their commitment to keeping the UK at the forefront of financial innovation by strengthening their partnerships with tech scale-ups.

This commitment follows the successful launch last year of the world’s first FinTech Pledge across the UK banking sector. The first five signatories of the pledge; Barclays, HSBC, Lloyds, NatWest, Santander; have now implemented the core components to increase transparency and communication when engaging with prospective FinTech partners, and continue to review best practice and share their experiences with the second cohort of signatories; Atom Bank, Co-operative Bank, Nationwide Building Society, TSB and Virgin Money; as they finalise preparations to put the principles into action within the committed six month timeframe.

Increasingly, tech start-ups and financial institutions are looking to partner with each other to drive better consumer and client outcomes. For example:

• Barclays has recently partnered with FinTech scale-up, Flux, to provide customers with in-app digital receipts
• TSB has signed a partnership deal with billing FinTech ApTap, to help customers manage their bills and subscriptions more effectively
• Digital Partners, a Munich Re company, partnered with scale-up, Bought By Many (a member of Tech Nation’s newest Future Fifty cohort) to support the development and launch of innovative, customer-focused pet insurance

The UK’s InsurTech sector growth

The new signatories sign at a pivotal time for the UK’s insurance and InsurTech sectors, as InsurTech sees rapid growth in the UK, increasing its weight as a strategic sub-sector for the UK economy. In March 2021, London-based, Zego, which provides insurance to gig economy workers, raised US$150 million and became the UK’s first InsurTech unicorn. Looking at broader VC investment trends, in Q1 of 2021 alone, UK InsurTech companies raised US$187 million, representing 3% of all UK VC investment, and representing more than half of total UK InsurTech investment in 2020.

The growing success of UK InsurTechs has been largely attributed to the creative ways they address customers’ insurance needs in an increasingly digital economy, opening up new opportunities across the whole of the insurance value chain.

In a sign of increased appetite for insurance innovation, Aviva earlier this month introduced a new cyber insurance offering for SMEs to help them combat the growing threat of cyberattacks, and in March 2021, Lloyd’s launched the first version of its Core Data Record (CDR) for market consultation in an effort to standardise data flow through the market. In response to the boom in cryptocurrency and blockchain technology, new forms of decentralised insurance are also emerging, such as Nexus Mutual and Etherisc.

In response to the growing desire amongst both InsurTechs and insurance firms to foster stronger partnerships with one another, Tech Nation’s Insurtech Board has today published a report on Breaking down barriers to productive partnerships to explore how insurance firms and InsurTechs can best work together to foster real relationships and drive higher levels of innovation across the industry. As an immediate next step, the Insurtech Board invites insurance firms to sign the UK’s FinTech Pledge and implement its key standards to continue strengthening and building the UK’s insurance sector.

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