The government has been instrumental in supporting businesses during the Covid-19 pandemic, however many insurtechs have found that these schemes incur pitfalls and strict eligibility criteria that does not work in their favour   

The Insurtech sector has not had an easy ride during the coronavirus pandemic especially regarding funding as some government schemes do not do what they say on the tin.

Prior to the pandemic, the Spring Budget saw Entrepreneurs Relief slashed by 90%. But the government introduced the Coronavirus Business Interruption Loan Scheme (CBIL) which many insurtechs and startups later discovered they were not eligible for.

Trade body Insurtech UK then appealled to the chancellor of the exchequer – Rishi Sunak in an open letter asking for relief measures with its members raising a number of concerns.

And on 4 May the government launched Bounce Back Loans Scheme (BBLS) for Britain’s small businesses to borrow between £2,000 and £50,00, this includes startups and insurtechs.

Although James York, policy and communications chair at Insurtech UK welcomed the government’s measures to support businesses, he said that given the sheer pace that these schemes have been implemented at, it is inevitable they will need tweaking.

Insurtech UK has been working with its founder members and officials to create a clear channel of communication between the insurtech sector and government.

“This ensures the feedback of our members and the unique needs of insurtech businesses are considered when government reviews the relevant support schemes,” York told Insurance Times.

Although the current frustrations from members appear to be focused around the inconsistencies between the lenders in delivering these schemes.

Insurtech UK believe that these are issues that can be resolved, and it is liaising with government to address these concerns. Many of its members believe that government schemes need to cater to startups more effectively.

When asked about government schemes, Dylan Bourguignon, founder and chief executive at insurance startup So-Sure said that the implementation of schemes is not matching headline ambitions, he warned that by the time they finally get deployed it might be too late for many young businesses.

“The furlough scheme is the only one that appears to work as designed. We nonetheless keep our hopes and spirits up.”

Square peg in a round hole

One of the issues involves lenders. Bundeep Singh Rangar, chairman at PremFina told Insurance Times: “It’s like trying to fit a square peg in a round hole. Banks have their own criteria which doesn’t always match the interpretations of government announcements, causing issues for receiving funds.”

Speaking about Bounce Back, Mukesh Mittel, chief executive at insurtech, Different Life said: “This was a relatively straightforward process if you were an existing business customer with one of the accredited lenders. If your business bank was not unfortunately accredited, the process was far more involved and as such does not encourage banking with one of the newer banks.”

Mittel has urged the the government to encourage further equity investments rather than just debt financing, suggesting that this could be done relatively easily through amending existing schemes such as the enterprise investment or seed investment scheme.

Meanwhile, Matt Hodges-Long, chief executive and co-founder at TrackMyRisks; and co-founder of Insurtech UK told Insurance Times: Nine days on from the launch of the Bounce Back Loan Scheme we have still not managed to successfully navigate the Barclays application process.

“Barclays inability to process customer applications online, respond to emails or calls has been widely reported in the press from day one. We feel incredibly let down and seek urgent clarification on this appalling situation from the FCA and PRA.”

At the beginning of May, when the Bounce Back Loan opened up, Barclays revealed that it had approved 200 of its initial applications within minutes of the portal opening but then fell behind as the requests kept coming.

quarterly-insurtech-briefing-q1-2020-covid-chart_Willis Towers Watson

Source: Willis Towers WatsonQuarterly Insurtech Briefing Q1 2020

Waning investor appetite

Gavin Sewell, chief executive at honcho told Insurance Times that the insurtech applied for the CBILS loan through Barclays early on in the crisis.

He added: “After some positive feedback we were informed we were not eligible due to our loss-making status. Fortunately, we closed a funding round soon after. We have looked at the Future Fund, but this is not suitable in its current format due to the exclusion of EIS investors.”

Sewell is optimistic that Future Fund will be restructured to be more suitable to the vast majority of early stage businesses like honcho.

“We will likely need support later in the life of the pandemic as the time between funding rounds is expected to increase due to waning investor appetite,” he said.

Although, Bourguignon, added he was grateful for the government’s speedy reaction and delivery of schemes.


Despite this, insurtech Urban Jungle has managed to obtain £2.5m in funding, which followed a period of growth for the firm. Jimmy Williams, chief executive at Urban Jungle told Insurance Times: “We expect to see the pandemic accelerate trends which were already happening. We’ve seen a huge amount of digitisation among customers in recent years, and this has accelerated since the crisis began.

“Customers also have an increasingly high bar for their digital experiences. People expect every industry to reach the high standards they experience at their favourite online brands. They want a personalised user experience, responsive technology and easy access. But the half-hearted offerings of the traditional industry just aren’t cutting it.

“In terms of Insurtech more generally, the industry is starting to really grow up and move away from speculative technology. That might take five to ten years to pay off, toward practical solutions that can drive lower costs in the here and now, and that’s where we are at.”

As well as a further two Insurtech UK members – Envelop Risk raised $6m and Bikmo raised £1.8m, and insurtech, By Miles has raised £15m in a series B funding round.

Read more…Chancellor unveils £125bn startup package, but will it be enough to uphold insurtechs?

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