The regulator thought the hub would be a ’nice way to formalise the relationship’ with insurtechs on the Isle of Man
Regulator the Isle of Man Financial Services Authority (IoM FSA) is preparing to launch an innovation hub for non-regulated digital financial agencies operating on the island – this will work alongside the regulator’s existing sandbox scheme for regulated entities, according to Ros Lynch, head of supervisory practices and innovation strategy at the IoM FSA.
In February 2022, IoM FSA launched a sandbox initiative to provide a live test environment for its regulated entities – this aims to “support innovation actively” in the Isle of Man.
Speaking exclusively to Insurance Times at the Isle of Man Accelerator Program’s inaugural conference on 26 January 2023, Lynch confirmed that the regulator’s new innovation hub will harbour similar goals to the existing sandbox. She added that there is no set launch date for the innovation hub as yet.
The sandbox allows firms to test innovative propositions in the market with real consumers.
She explained: “[The] sandbox is effectively for people who sit within our perimeter – they don’t need new regulation.
“Then our innovation hub, which supports people outside the perimeter, sits within [our] digital finance remit because we have a role in advising [these firms] and we might be able to amend or change regulation in the future if deemed appropriate.
“So, if you are regulated, you do the sandbox. If not, you sit in the innovation hub.”
Some details for the innovation hub are still yet to be finalised but overall it will provide knowledge and regulatory guidance – it is set to launch this year in the first quarter.
Delivering ’basic good governance’
Lynch explained that several fintech and insurtech companies have launched in the Isle of Man and so the IoM FSA felt that the creation of an innovation hub was a “nice way to formalise that relationship and showcase what we do as a jurisdiction, which we probably haven’t done as well in the past”.
She continued: “Being in a small jurisdiction has its advantages because we get to see all sorts of regulation that perhaps you might not see in larger jurisdictions.”
As a regulator, Lynch said the IoM FSA would describe itself as “technology agnostic” because it has to ensure it can sufficiently oversee firms within its remit regardless of the technologies they may be using.
She deems this stance important for “basic good governance”.
“We are on our own [technology] journey,” she said. ”We see what people are doing out there and [that] helps us learn.”
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’Test bed for innovation’
Underpinning its drive for innovation through its sandbox and hub initiatives, the IoM FSA also formed part of the original working group that pushed the four-month Isle of Man Accelerator Program through to fruition – the scheme’s first cohort concluded in January 2023.
Lynch said: “We have been heavily involved supporting it from a regulatory perspective. We see [the island’s] fintech and insurtech programmes as being fit and fundamental.”
Lynch hoped the accelerator helped to showcase the Isle of Man as a “test bed for innovation”.
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