May 8, 2019

Regulation and technology in the insurance market

In summary, Market Insight May 2019

Regulation and technology together with reports of change in the insurance market resulted in plenty of interesting news last month. Starting with regulation, the FCA published their business plan outlining their main priorities, together with an update on the ‘Access to Insurance’ initiative and their progress with technology. In addition, they issued a report on the General Insurance Distribution chain.  Technology news includes the ubiquitous ‘insurtech’ again, together with Machine Learning . Both continue to generate interesting column inches.  Finally we have an update on an exciting new re/insurer; changes for Lloyds of London and plenty of interesting research for the insurance market.

Regulation Round Up

Financial Conduct Authority (FCA) Regulation News

  • Business plan:

    The FCA published their 2019/2020 Business Plan detailing key priorities together with planned specific activities for the next year.  In summary, the four ongoing priorities are:

    • Culture and governance, including extending the Senior Managers and Certification Regime to all firms
    • Fair treatment of firms’ existing customers
    • Operational resilience
    • Combating financial crime and improving anti-money laundering practices, by enhancing the use of technology and data

In addition, the plan sets out three longer term priorities:

    • The future of regulation
    • Ensuring innovation and the use of data work in consumers’ interests
    • Examining the inter-generational challenge in financial services
  • Update on ‘Access to Insurance’:

    The Regulators are working with stakeholders to improve access to Travel Insurance for people with pre-existing medical conditions. In the first place the objective is to ensure these people are aware of travel insurance providers that can provide them with suitable insurance. The FCA have recently updated the information on their progress and will consult on the initial draft proposals before Summer 2019.

  • General Insurance Distribution Chain:

    The FCA have now issued their report following a thematic review of the General Insurance Distribution Chain. In light of their findings, the FCA “identified significant potential for harm to consumers arising from the product development and distribution approaches currently employed in some sectors of the GI market and by some GI firms.” The report made uncomfortable reading for some and subsequently Paul Lewis, the Financial Journalist, made his views clear in his article Insurers can’t let Distributors rip off customers. At the other end of the spectrum, in the article Insurance Industry reacts to ‘consumer harm’ report by the FCA, Dr Matthew Connell, director of policy and public affairs at the Chartered Insurance Institute (CII), said “it’s worth taking some time to acknowledge those people in insurance who get it right…”

  • Technology:

    From 29 July to 2 August 2019, the FCA will hold a Global AML & Financial Crime TechSprint. This initiative will explore the potential for new technologies to enhance information sharing between financial institutions, regulators and law enforcement across jurisdictions. The ultimate objective is to detect and prevent financial crime. The TechSprint will be held in conjunction with Abu Dhabi Global Markets (ADGM), Australian Transaction Reports & Analytics Centre (AUSTRAC) and Monetary Authority Singapore (MAS), and in consultation with Europol

Technologies in focus


  • New technology in focus:

    FinTech magazine took a look at the Top 10 Insurtech Companies. According to this article, these companies have the potential to “influence, change and even disrupt the global insurance market in the future”:

    1. Zhong An – Marketed as “China’s first complete online insurance company”. Although this heads the FinTech list, the drop in share price underlines the challenge for new start-ups to break into profit.
    2. Acko General Insurance – A digital insurance firm based in India
    3. Oscar Health – This American firm aims to be a health insurance company centred around the patient
    4. Lemonade – Although founded in 2015 and so now relatively mature, this company still keeps making these lists. The company uses AI and chatbots not only to deliver insurance policies but also to handle claims for customers. The entire process is managed on desktop and mobile (through its iOS and Android applications) without employing the use of insurance brokers.
    5. Shift Technology – A Parisian based company that offers a Software-as-a-Service (SaaS) solution to detect fraud.
    6. Neos – A UK based firm specialising in home insurance and smart technology. This listing came together with news that Neos aims to conquer the US by a partnership with American Family Insurance.
    7. Trov – An on-demand insurance platform
    8. Slice – Provides pay-per-use insurance with offices in the US and London.
    9. Quantemplate – A London based firm that offers machine learning, data transformation and analytics solutions to the insurance industry
    10. BIMA – This Swedish based company aims to promote financial inclusion by offering insurance and mobile health services to low-income families.
  • Insurtech Incubation:

    Insurtech Europe, Plug and Play’s Insurtech platform based in Munich, Germany, announced the next group of 18 start-ups for their insurtech development initiative. This initiative is coupled with the next initiative from  Plug and Play globally. This team has launched the latest accelerator batch for start-ups. Ultimately, 150 start-ups will be participating in this program.

  • Lloyds Lab:

    At the end of April, Lloyd’s Lab revealed a second cohort of insurtechs. Ten more teams of insurtech start-ups will have ten weeks to develop their ideas. They will be supported by Lloyd’s experts in addition to having access to potential investments. Equally important is the benefit of working space at the Lloyd’s building.

  • Cytora raises £25 million:  

    In a funding round led by EQT ventures, Commercial insurtech Cytoria raised £25 million . Cytoria applies AI to Commercial Insurance to reduce underwriting costs in addition to helping Insurers price more accurately.

Machine Learning

Interesting Forbes article, In Travel Insurance, Machine Learning Is Turning Conventional Wisdom On Its Head. The article highlights work done by Allianz. The Insurer has added machine-learning and artificial intelligence technology to offer real-time personalization. As a result of this technology driven initiative, Allianz can now deliver a travel product recommendation in less than a second.

Other insurance stories in the spotlight

Insurer News

  • New Insurer:

    Insurance industry veteran Stephen Catlin hit the headlines as a result of a confirmed investment of $1.8 billion for Convex Group Ltd, a new Bermuda based re/insurer. In an article in The Royal Gazette , Paul Brand, the Deputy CEO is quoted as saying “Stephen and I see a great opportunity; there is demand for an insurer to bring a refreshed and enhanced offering to market, one that puts fairness and honesty at the centre of its singularly client focused proposition.”


  • Lloyds of London announce new strategy:

In a recent Press Release, Lloyds unveiled a number of initiatives “that could shape the future of the worlds (re) insurance market.” In brief, the new ideas outlined are:

    • A platform for complex risk.
    • Lloyd’s Risk Exchange for less complex risks.
    • Flexible capital that can access a diverse set of risks on the Lloyd’s platform.
    •  A Syndicate-in-a-Box, for innovators to bring new products and business to market.
    • A next generation claims service.
    • An ecosystem of services.

For the most part, the reported reaction from the Insurance Market is positive. Jeanette Newman, the President of the Forum of Insurance Lawyers (FOIL) summed up the general sentiment. She said “We are particularly excited by the bold focus on the use of technology to re-shape the future of the market. The creation of a complex risk platform leveraging data and technology plus the fast track ‘syndicate in a box’ for the out-performers will help catapult Lloyd’s back where it belongs – a home for the best talent at the forefront of risk transfer.”

Changing Risks

The European Union (EU) have provisionally agreed to make Speed limiting technology mandatory for all vehicles sold in Europe. Under the current proposals, the regulation will be effective from 2022. The Department for Transport has already said that the rules will apply in the UK, despite Brexit. Not only will this be a huge change for the motor industry, but it is also bound to impact on insurance. Useful information in the article,  UK is set to adopt vehicle speed limiters.


  • Taking Control:

    Lloyd’s, in collaboration with the University of Surrey have explored the impact of AI and Robots for the insurance market. The result is two useful and informative reports under the title Taking Control

  • Insurance complaints:

    A report on the complaint figures for Regulated Firms gained attention with the headline ‘ Motor and transport insurance sees 13% rise in complaints.’ The article has taken key statistics from the earlier FCA complaints data

  • Fitness Trackers:

    Initially health insurers saw the benefit of fitness trackers. In the same way, the benefits are now being identified in the pet insurance market. In recent research, GlobalData predicts 51.7% of dog owners would use fitness trackers for their pets.

    • Operating model and process redesign
    • Distribution
    • Legacy systems
    • Alternative Sourcing
    •  Intelligent Automation (IA)

The document is full of interesting statistics, for example this chart shown below :

Mergers and Acquisitions

  • Arch Insurance:

    Arch continues acquisition spree in the UK adding both Axiom Underwriting and Obelisk Underwriting to the group.  This move follows on from the acquisition of The Ardonagh Group’s UK commercial lines business together with part of its Geo Underwriting operating segment back in January.