The UK insurtech landscape is flourishing, boasting mega funding rounds and ongoing expansion - but what has prompted this shift? 

By Technology Editor Clare Ruel

The UK continues to be the innovation capital for insurtech.

In April 2022, I spoke with Stephen Brittain, director and co-founder of investor Insurtech Gateway. He told me that “the UK has taken a natural position in the insurtech scene as the innovation capital”.

Clare Ruel

Clare Ruel

However, this is not the first time that the insurtech market has been painted as the flagbearer for innovation.

Applied Systems’ senior director of customer experience, Stephen Murphy, noted a similar sentiment in our last conversation in March, explaining that the UK has a “real desire to see the insurtech landscape grow and mature”.

Looking even further back, in December 2019, the UK government’s Department for Digital, Culture, Media and Sport (DCMS) confirmed its commitment to support the technology sector by forging key international partnerships.

This included the promise of building four innovation hubs in Israel, Kenya, Nigeria and South Africa to facilitate these partnerships.

This year, insurtech startup trade body Insurtech UK has taken up the mantle to continue driving this agenda, leaning on its 2019 partnership with the government’s Department of International Trade.

The trade association has “strong ambitions” to make the UK the global leader for insurance innovation.

Solving ’real problems’

But why are insurtechs viewed as being on the cutting edge of innovation?

For Brittain, the Covid-19 pandemic has spurred insurtechs to ditch propositions centred around “quite trivial” fixes and instead focus their time, energy and creativity on ”helping close protection gaps” and solve “real problems”.

“They must have reflected - what does this all mean and why am I bothering? The road is long if you are launching a business and it helps if you find a problem to solve,” he told me.

As a result of this “post-pandemic phenomena”, the stable of businesses in Insurtech Gateway’s portfolio has increased, Brittain added, showcasing ”a new type of founder” that has “real missions”.

He continued: “As investors, we all feel that we have a role to play here – to enable proper, real world problems to be solved. It’s a wonderful time to be solving real problems, getting under the skin of it with clever risk systems and then the turn to the US market.”

One firm demonstrating this trend is UK-based MGA FloodFlash, which counts Insurtech Gateway as one of its investors. Aiming to plug what it viewed as a protection gap and provide commercial flood insurance via parametric policies, the business completed a $15m (£11m) funding raise in February 2022.

There’s also pet insurance specialist ManyPets, which told me that its business boomed during the pandemic due to a surge of lockdown-induced pet adoption.

Meanwhile, Collective Benefits, which provides insurance for self-employed workers, saw pandemic-linked business growth too thanks to the UK’s reliance on home deliveries - and, therefore, gig economy workers.

’Quirky thing’

Brittain marvelled at the way the insurtech sector has developed.

“Five years ago, it was this quirky thing, he said. 

“In five years’ time, we will look back and say ‘this is what we know as insurtech’. This is what we meant all along. It’s a reframing of insurance to solve real problems – just like it used to be.”

For me, insurtechs have always been the underdog of the insurance market. In the beginning, they started off as small competitors that many said would become obsolete. 

Post-pandemic, however, they have proven their worth and are leaning towards being vital collaborators in insurance as they eat, live and breath innovation - they are often more nimble than incumbents. 

I will definitely be cheering the insurtech sector on as it grows further.