The letter argues that the funding proposed is ’extremely important’ in continuing the trend of the UK being a leader in insurance innovation
Six industry associations have signed an open letter to MP and economic secretary of state John Glen ahead of the Autumn Budget on 27 October 2021, in support of a funding proposal designed to back innovation in insurance.
The letter was signed by Insurtech UK, the ABI, the Managing General Agents’ Association, Lloyd’s Market Group, London Market Association and the London and International Insurance Brokers Association.
The funding proposal has been put forward by government agency Innovate UK’s Next Generation Services programme, which aims to support the transformation of the accountancy, insurance and legal services sectors through the responsible use of artificial intelligence and data.
The letter said: “Our position is that Next Generation Services funding is extremely important to continue the trend of the UK being a global leader for insurance innovation.
“We would invite you to consider the importance of digitalising the UK insurance market, how Next Generation Services can help achieve this and how the UK insurance sector’s continued drive to promote insurance innovation aligns with the UK government’s wider objectives.
“Beyond industry specific challenges, insurance innovation can also become a key part of the government’s objective to see financial services innovation as a driver of the UK’s global competitiveness and productivity growth.
“We believe that Next Generation Services can play an important part in accelerating the UK’s efforts to address and ultimately solve both these industry and governmental objectives.”
Supporting digital and competitiveness objectives
The insurance industry bodies argued that insurance innovation has a “dual benefit to the UK economy, both as a significant export driver in its own right and as an enabler to productivity growth through stronger risk management in the UK”.
The letter continued: “This would also support the government’s digital and competitiveness objectives on smart data and extending open finance, building on the success of open banking, to promote innovation in insurance.”
The trade associations said that insurance innovation has the potential to solve many long-standing industry challenges - for example, improving productivity and the customer experience, closing the protection gap and encouraging wholesale digital adoption and culture change.
The letter added that a “more engaging customer experience and a greater understanding of risk can help improve societal resilience and ensure customers have the right level of protection for their needs in the years ahead”.
Signatories of the open letter believe the insurance sector will have a key role in helping achieve the government’s objectives to ’Build Back Better’ and to ’Level Up’ regional areas through innovation in established insurance lines and the development of new forms of cover.
Build Back Better is a scheme put forward by the UK government to build more resilient and greener property - this plan was presented to parliament in March 2021.
The Level Up strategy, meanwhile, aims to address regional inequality in the UK. This has been a focus for the government since 2019.
Insurance is vital part of UK economy
The Kalifa Review of UK Fintech, which was commissioned by HM Treasury and published on 26 February 2021, identified several regional insurtech clusters across all four corners of the UK - this is consistent with the UK insurance sector’s strong regional presence.
Next Generation Services funding will help further boost wage and job growth in these areas, providing even more support to the government’s Levelling Up agenda.
Lastly, the letter added that the UK insurance market is a “vital part of the UK economy and is key in underpinning the UK’s societal and climate resilience”.
Therefore, the signatories believe that the need for innovation will become even more urgent in the years ahead, as risks become more complex and pose greater challenges to society, for example, climate change.