Insurtech UK urges Government to exercise budget caution
Insurtech UK has strongly advised the UK Government's chancellor, Rishi Sunak, to exercise caution in his plans to raise Insurance Premium Tax (IPT) at the current Budget.
The representative organisation, which raised concerns with both HM Treasury and HM Revenue & Customs (HMRC) say a "fairer" VAT regime would help insurtechs scale faster – and would then contribute more to the economy – encouraging further investment.
Insurtech UK's co-chairs James York and Luisa Barile said in a joint statement, "There are reports that the Chancellor may be considering a rise in IPT (Insurance Premium Tax) at this Budget, as part of an initial plan of tax rises to help rebuild the public finances due to COVID-19. We would firstly urge caution in that matter at a time when the entire economy needs some breathing space to get back on its feet."
They went on to say that such a move would hinder the recovery of the insurance sector following the damage wrought to the market by the COVID-19 lockdowns.
"This would only add an additional cost burden to customers. However, if action is taken, then we call upon the Chancellor to end the anomaly within the tax regime facing insurtech intermediaries in the UK, where they cannot reclaim any VAT (value-added tax) on incurred costs."
Growing insurtech market
The fintech and insurtech industry has enjoyed a period of growth in the UK in recent years. The insurtech sector also attracted more than £1.6bn in investment funding scince 2015.
Insurtech UK says greater investment would have certainly been achieved had the tax system been more favourable. The representative body also said that other tech sectors are not subject to the same VAT legislation.
"As technology-intensive businesses, a larger proportion of costs for insurtechs are liable for VAT, acting as a disincentive for investors," the co-chairs pointed out.
"While the insurtech sector has seen considerable growth in the UK in recent years (even though the pandemic), VAT costs undoubtedly holds it back.
"This is something that Insurtech UK has consistently raised with HM Treasury and HMRC over the past 18 months. An end to this regime would allow the sector to grow faster, bringing wider benefits to both consumers and the broader economy."
Insurtech UK added that it is appealing to HM Treasury to examine how new freedoms outside of the European Union can facilitate a "more innovation-friendly landscape" for insurtech intermediaries.
The statement continued, "We believe resolving the current VAT issue would be in line with HM Treasury's stated objective of promoting a 'vibrant, innovative, and internationally competitive insurance sector' as well as aligning with PRA's (Prudential Regulation Authority) goal of 'promoting developments in driving further digital insurance and innovation."
Akur8’s US$30mn Series B to fuel US and APAC expansion
Still a relatively new company in the sector, Akur8’s progress since it was founded in 2018 has been characterised by cutting-edge tech, strategic growth, and a highly personable approach that clearly demonstrates the youthful innovation of insurtech itself.
The company strives to embody four key values:
- Challenging a status quo that doesn’t benefit customers
- “Disrupt the known, organise the unknown”
- Provide artificial intelligence (AI) tech with a distinctly human edge
- Create solutions that will endure the test of time
At the heart of Akur8’s business is its Transparent AI solution. Capable of empowering actuaries and pricing teams through better, faster decision making, the insurtech touts it as “the only solution that automates rate modeling while keeping full transparency and control.”
Transforming insurance pricing
In just two years, Akur8 has acquired over 30 customers in 10 countries - including high-profile insurers like Munich Re, Tokio Marine Kiln, AXA, and Generali - and established additional offices in London and New York. Now, the company is keen to develop its business in the US’ verdant insurance market and build its presence in APAC.
“The BlackFin team is thrilled to see Akur8 continue to spread its wings and deploy its next generation pricing platform across insurance carriers worldwide,” said Julien Creuzé, Partner. “We have built a great relationship with the Akur8 management team and it’s a pleasure to welcome new investors and continue this journey with them.”
Guillaume Beraud-Sudreau, Co-Founder and Chief Actuary at Akur8, added, “We are humbled by the trust that our clients and investors have placed in Akur8. Building the future of insurance pricing powered by Transparent AI has been our goal since the first day of R&D. Now this vision has become reality and we can’t wait to accelerate our growth to become the global reference in insurance pricing.”
Cover image source: Akur8