Last week I went to an event organised by NGIN in collaboration with LCP and Guevara. The talk, held in the Lloyd’s Library, focused mainly on Guevara’s new model of car insurance - a peer-to-peer scheme which aims to give a more competitive deal to the customer - and how they are trying to disrupt the conventional insurance model.
Something I found of particular interest were the comments made by Andy Tait, Technical Insurance Advisor at Guevara, regarding the difficulty he has experienced in the UK getting start-ups off the ground, particularly compared with the rest of the world.
Andy highlighted the rigorous guidelines and rules around insurance start-ups in the UK and Europe compared with emerging markets. There are not only high standards of capital requirements from the regulators but also from The European Commission’s Solvency II directive, which came into effect at the beginning of the year to help improve consumer protection. One of the points made was that because there are so many complex regulations in the market it has made it a lot more difficult to create smaller, nimble companies as they often drown in bureaucracy before ever coming to fruition. Indeed, a start-up needs a minimum of £10million in solvency for the first three years in order to gain approval from the regulators, not an easy feat.
The London Market arguably remains the centre of the global insurance market. It strikes me as counterintuitive that a market which historically prides itself on being a leader would fall behind when it comes to fostering an environment of innovation and change. Both Lloyd’s and the London Market are talking about change (hello TOM) and challenging the old way of doing business. But when it comes to start-ups, is London striking the right balance when it comes to providing a regulated but nurturing landscape which offers the best chance of success?
Or, should more be done to foster a landscape of experimentation and embrace all the success and failures that come with it? Pixar’s president, Ed Catmull, has a very positive view point regarding making mistakes. “Mistakes aren’t a necessary evil,” he has said. “They aren’t evil at all. They are an inevitable consequence of doing something new… and should be seen as valuable.” The London Market has been encouraging insurers to innovate within their own organisations, however when it comes to encouraging start-ups, it seems to be a different story.
Greer Stead, Marketing and Communications Manager at Gracechurch.