Country _ Name
InsurTech is composed of the words “insurance” and “technology”. It is used as a collective term for the application of modern technologies in the domain of insurance services.

Digital and mobile brokers: FinTechs belonging to this category mostly act as digital insurance brokers and provide users with an overview of their insurance contracts with their respective conditions. Some FinTechs offer very short-term insurance contracts to cover specific cases which can be concluded often spontaneously via mobile devices. Oftentimes additional consulting services are offered.

Internet of things: FinTechs belonging to this category collect data by measuring for example the driving style of the customers or through wearables the customers wear to consult on, offer and/or manage the customer’s insurances.


Attitude of the country towards InsurTech-services

The UK insurance sector (including long-term savings such as pensions) is the largest in Europe and the fourth largest in the world. UK insurers underwrite a large proportion of international risks. Total annual premiums are in the region of £300 billion.

The UK Government’s view is that the insurance sector makes a vital contribution to the UK economy, It recognises the need for the UK insurance sector to embrace InsurTech in order for the UK to maintain its position as one of the main international insurance markets. The Government also recognises the potential to reduce costs, and to increase availability of insurance and competition, particularly for lower-income consumers.

Market comparison websites and apps are now well established in the UK and are seen as playing an important role in market transparency and competition in the consumer market. 

Legal affairs

Obligations and requirements to provide InsurTech-services

InsurTech firms are regulated in the same way as traditional firms carrying on insurance activities.

Firms effecting and carrying out contracts of insurance as principal (i.e. assuming insured risks) are authorised by the PRA (along with banks) because of the risk that insurance firms are capable of presenting to the UK economy as a whole. Firms carrying on other insurance activities (such as insurance mediation / brokering or introducing and administration of a contract of insurance) are authorised by the FCA.

The level of fees for application for authorisation to carry on business as an insurer depends on a matrix of factors, generally ranging from £750 to £12,500.
Application fees for carrying on insurance brokering or introducing activities are generally £2,500.

As with other regulatory permissions, ongoing annual fees will be payable, and firms carrying on insurance activities will be required to maintain prescribed levels of regulatory capital. For firms carrying out contracts of insurance as principal (i.e. assuming insured risks) capital requirements are as set out in the EU Solvency II Directive (2009/138/EC) - as amended by Directive 2014/51/EU (Omnibus II), as now on-shored in to UK domestic law.

Additional comments regarding the legal situation for InsurTech-services or what InsurTech’s must be aware of in this business area

In April 2022, the U.K. government announced a consultation process seeking views on reforming the prudential regulation of the UK insurance sector. Its objective was “to spur a vibrant, innovative, and internationally competitive insurance sector” as part of its “Brexit Freedoms” strategy. The two main proposals were to cut the risk margin, the capital buffer insurers are required to hold, and a mechanism to allow insurers to hold less capital for certain long-term, illiquid investments
if they are closely matched to liabilities. However, the Governments proposals were met with resistance from the UK insurance industry. The Association of British Insurers’ view was that the Government's proposed reform package was "significantly less favourable than the EU version of Solvency II" and the fundamental spread plan would create a "material Brexit penalty," leaving annuity companies worse off than they were under EU rules.

The UK Government still has ambitions to move away from the requirements of Solvency II, although it remains to be seen whether it will do so. In any event, any reforms are unlikely to be introduced before 2024.

Economic conditions

Market size for InsurTech-services and biggest companies in this business area

Some commentors expect the UK InsurTech sector to grow considerably. The size of the market is difficult to quantify, not least because of a lack of clear categorisation of what is “InsurTech”. Insurers have been using sophisticated technology (including, increasingly, AI) to assess and price risk and premiums. Such activity is not easily visible or measurable outside the individual insurance companies themselves.

Consumer facing InsurTech, such as market comparison apps, or automated premium pricing and allowing consumers to enter into insurance contracts (of various kinds, ranging from product insurance for new purchases, travel insurance, motor and household insurance) and business insurance (such as per journey policies for Uber drivers) without direct human engagement within the insurer, are more visible.

It is arguable that all insurance companies utilise FinTech to some extent, although some new companies (primarily intermediaries rather than insurers) are FinTech driven and can more appropriately be called “FinTech” companies. At this level, FinTech is more focussed on delivering insurance services rather than in the creating of the insurance product itself. 

Additional comments regarding the economic situation for InsurTech-services or what InsurTech’s must be aware of in this business area

Please see above. The economic pressures now faced by many UK households may increase pressure on insurance companies to drive down costs, and so to embrace FinTech solutions, or open opportunities for new InsurTech innovations. The reduction of availability of intellectual capital (experienced personnel) to manage insurance business (and within the UK economy generally) as a result of Brexit may also lead to more insurance sector companies investing in FinTech solutions.



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