Lloyds’ ‘Launch Innovation Lab’ targets insurtech
Developed in conjunction with FinTech Scotland and launched in October 2020, the incubator aims to help 12 companies create proof of concepts for their business over a 12-week period.
The ultimate goal will be to lead a new vanguard of customer-centric and data-driven insurtechs for the modern industry.
Previsico joins the programme
One of the latest companies to join ‘Launch Innovation’ is live flood forecasting company . Based in the UK, it originated from Government-sanctioned research conducted by Loughborough University following severe floods in the Somerset area during the winter of 2013 to 2014.
Professors Yu and Dr Avi Baruch subsequently co-founded Previsico in 2019 as a ‘spin-out’ of this concept. For its part, Lloyds is hopeful that the company’s flood prediction technology will be an asset to its own home insurance customers.
“The market is ripe for disruption,” said David McLeay, Innovation Product Owner at Lloyds. “We have an environment where customers’ needs are changing and in parallel, there are a lot of significant new technologies opening up opportunities.”
Lucy Coutts, Business Development Manager at Previsico, added, “We are delighted to join the ‘Launch Innovation Lab’. It will give us invaluable experience, with unprecedented access to business leaders, designers, industry experts, and mentors, as we shape our solution to fit Lloyds’ specific needs.”
Through a combination of digital transformation and the momentum for change initiated by the pandemic, insurance is currently undergoing some of the and diverse innovation in the broader fintech industry.
Lloyds’ decision to provide a platform for the development of insurtech is a heartening display of support that stands to bring considerable consumer benefits, as well as insurance industry progression. As McLeay DIGIT:
“We’re going to offer classes and surgeries where they can talk to technical architects and cloud infrastructure experts, talk to our risk teams, talk to our finance guys, speak to our design experts, our systems thinkers, our UXers, our corporate finance team – anyone that can help their business develop.
“As a big bank, we have a lot of people in a number of highly specialist roles, and we’re good at a number of big bank functions. However, we accept we’re not as agile, fast and reactive as some of the start-ups at certain things. We want to create an environment where both parties can mutually benefit from the relationship.”
Global investment in insurtech reaches all-time high
Global investment in the InsurTech sector reached an emphatic record during H1, 2021, as half-year funding of US$7.4 billion exceeded full-year investment in 2020, and in every other year, according to the new Quarterly InsurTech Briefing from Willis Towers Watson.
It was found that the latest quarter saw 162 deals yield more than $4,824 million in investment, a 210% increase over Q2, 2020. The enormous quarterly total, itself more than any annual total before 2019, was driven largely by 15 mega-rounds of $100 million or more. Collectively, these deals reached $3.3 billion, or two-thirds of total funding during the quarter. The money was raised predominantly by later-stage players seeking expansion.
A need for the insurance community to reflect digital changes
Series B and C fundraisings drove a large number of deals in the second quarter, but the number of early-stage deals also increased. They were up by more than 9% from the previous quarter, and 200% from pandemic-stricken Q2, 2020. As a percentage of overall deals, early-stage activity held roughly steady, at 57%.
InsurTechs focused on distribution accounted for 55% of start-up deals, and for 10 of the 15 mega-rounds. Most of the distribution InsurTechs target reduced dependence on agent channels. Of all Q2 deals, 73% were for P&C-related InsurTechs, while 43 companies raised funds for L&H technology. Funds were raised by companies from 35 countries, including new entrants Botswana, Mali, Romania, Saudi Arabia, and Turkey.
Dr. Andrew Johnston, global head of InsurTech at Willis Re, said: “As technology changes our lives, society will demand an insurance community that reflects and supports our changing, digitally empowered behaviours. Consumers and businesses increasingly expect insurance to be delivered when and how they want it, and risk carriers that fail to respond will fall away over time. To embrace technology is a minimum survival condition. Those that use it to redefine service in the insurance world will thrive. That means a positive future for InsurTechs that bring a truly differentiated business approach to our industry. Some of them will create untold long-term opportunities for themselves and the insurance sector.”