Rishi Sunak, the chancellor of the Exchequer, announced a string of new initiatives to boost the InsurTech and FinTech industry as part of his first spring budget.
He announced the launch of a review of the FinTech industry to ensure the sector can thrive after Brexit. Sunak also said that Tech Nationâ€™s Fintech Delivery Panel and InsurTech Board will continue to receive funding until 2022 to keep finding ways to make it easier for entrepreneurs to launch new initiatives.
The UK InsurTech industryâ€™s response to Sunakâ€™s announcement has been mixed.
â€œAs an InsurTech, naturally we are supportive of anything that promotes innovation, particularly within the insurance industry,â€ said Tim Hardcastle, CEO and founder of INSTANDA. â€œItâ€™s therefore great to see increased measures introduced yesterday that benefit both R&D investment and tax credits and will in turn will play a significant role in supporting future innovation.â€
However, he also suggested that more could be done to foster innovation in the InsurTech industry. â€œIn particular, insurance carriers need more options available to them to address the challenge of creating secure and scalable technology solutions,â€ said Hardcastle. â€œThis is a challenge for which a solution is far greater than simply receiving more R&D support. It requires a mind shift more generally, one in which the industry opens up and embraces technological developments that are already readily available to them here today.
â€œOver the last three years in particular, we have seen an increase in insurers recognising the importance of working with InsurTechs to drive digital transformation and bypass outdated legacy systems. This is promising, but there is still further to go. Ultimately, the winners will be those who embrace this technological evolution and innovation will only truly be embedded once this mind-shift takes force across the industry as a whole.â€
Insurtech UK, the trade association formally established in 2019, expressed its concern that the chancellor had scaled back entrepreneursâ€™ relief, a tax break for business owners, would be cut by 90%, which it believed would affect some of its members.
Stopping short of scrapping the scheme altogether, Sunak scaled back the relief so that business owners who sell their enterprises will pay 10% on lifetime gains of up to Â£1m compared with the previous Â£10m limit.
Insurtech UK said in statement seen by Insurance Times that it felt as if the chancellor had listened to its concerns and that the Â£1m lifetime limit was â€œsome form of compromiseâ€ as Sunak also â€œoutlined other additional initiatives to support startup businesses.â€
The trade body was also happy to see measures addressing R&D tax credits, enterprise management incentive options, insurance premium tax and value added tax for financial services. â€œThese are all issues that Insurtech UK are already engaging with government about and their inclusion offers a fresh opportunity to secure reforms to these areas for the benefit of InsurTech startups,â€ the statement continued.
â€œOf prime importance for Insurtech UK is that the government continues to support Britainâ€™s ability post-Brexit to maintain and strengthen its position as an international hub for innovation and talent. We will continue to work closely with government to make the UK the most attractive place to set up an InsurTech business.â€
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