How the shifts in powers and parties influence the Insurtech in UK?

Elections and Insurtech, how the shifts in powers and parties influence the Insurtech in UK?

Five quick takeaways on this post:  

1.      Turbulent Economic and Political Situation Adds Complexity:

Insurtech investments are highly sensitive to political and economic conditions, with recent political shifts in the UK adding new layers of complexity.

2.      Risk and Property Insurance—Flood Risk Insurance:

Increasing flood risks due to climate change are impacting both residential and commercial properties, making it challenging for insurers to provide affordable flood risk insurance.

3.      AI regulation and pro-innovation approach

AI regulations are becoming increasingly defined, significantly influencing insurers in their acquisition, management, and maintenance of AI across their business operations.

4.      Net Zero Transition:

Phoenix Group emphasizes the importance of net-zero ambitions, proposing key policy interventions for the Labour Government to accelerate the net-zero transition and enhance climate resilience.

5.      Prone to Small Businesses and Startups:

The current economic and political landscape is particularly favorable for small businesses and startups, requiring adaptive strategies to navigate this opportunity.

In June 2024, Labour Party won the United Kingdom general election, ending 14 years of Conservative rule. Labour Party in the United Kingdom is a political entity known for its social-democratic ideology. It encompasses a coalition of social democrats, democratic socialists, and trade unionists. Positioned on the centre-left of the political spectrum, the Labour Party advocates for policies aimed at promoting social justice, workers' rights, and equality within society.

Turbulent Economic Situation Adds Complexity

The insurtech investment landscape is notably sensitive to political and economic fluctuations. Following Labour’s recent triumph in the UK General Election, industry experts are analyzing the potential influence this political shift may have on the insurance sector.

Insurtech investments are highly sensitive to political and economic conditions, with recent political shifts in the UK adding new layers of complexity. Insurance industry, influenced by factors like inflation, Brexit, and rising energy costs, is facing new challenges.

Risk and Property Insurance—Flood Risk Insurance

One pressing issue is the increasing flood risk affecting both residential and commercial properties in the UK due to climate change. This heightened risk is altering insurers’ risk appetite, complicating the provision of affordable flood risk insurance.

Lloyd’s is optimistic about collaborating with the new UK government to foster economic growth and resilience. Their mission is to provide essential solutions to support disaster resilience, facilitate the transition, and attract global investment to the UK. They look forward to the government’s efforts to bring stability and implement reforms that enhance the economy’s competitiveness.

AI regulation and pro-innovation approach

Mind Foundry, an Insurtech startup, advocates for a customer-centric approach to AI adoption in the insurance industry. Compliance with AI regulations in heavily regulated sectors is not merely a checkbox exercise; it is an ongoing process that demands trust, understanding, accountability, and commitment across various departments within an organization. Every insurer must clearly define roles and responsibilities for risk management, ensuring that their AI technologies enhance value rather than pose risks.

Net Zero Transition

Net-zero ambitions are emerging as primary concerns for the new UK government. Phoenix Group, a leading life insurance company, has proposed three key policy interventions for the new Labour Government to accelerate the net zero transition at regional and local levels. These include establishing an investor advisory body to work with the Department of Energy Security and Net Zero (DESNZ), aimed at building the skills and capacity in local authorities needed to develop a viable pipeline of climate solutions.

Prone to Small Businesses and Startups

Politicians remain cautious about raising general taxes, with both the Conservative Party and Labour ruling out increases to national insurance contributions. However, labour party has launched favorable policies to support small and medium-sized enterprises. This policy may also lead to a favorable environment for startups.