Root Platform

By Charlotte Koep

Discerning customers who are increasingly spoilt for choice when it comes to what insurance products they purchase when, how and from whom means that digital transformation and technology adoption remain top of the insurance agenda, offering global insurtechs a good place to invest in for expansion, writes Charlotte Koep, CEO Root Platform  

For any Insurtech looking to enter new markets, there are a number of factors to consider. From an economic standpoint, it’s important to understand current and potential market demand, consumer behaviour and expectations, as well as economic stability and growth potential.  

Next, a company would consider the current technology infrastructure and the competition landscape of that market. Beyond that, there’s the cultural fit and potential for partnership opportunities. And last – though certainly not least – the regulatory environment.  

Sounds simple, doesn’t it? This checklist is vital before a company even considers making moves, and each element requires thorough research. If most of the elements provide you with a green tick, but a few present a big red cross, you’d be brave to invest your time and money.  

With all this in mind – and accepting that not every aspect will be totally perfect at any one moment in time – the UK provides a healthy picture at present, and I don’t expect that to change any time soon. 

It’s safe to say that the UK is the home of insurance, with Lloyd’s of London – the largest commercial (re)insurance marketplace in the world – established in 1689. In more recent years, the UK has developed into an insurtech investment hub, and provides perhaps the highest concentration of expertise across the insurance value chain. 

The UK is one of the fastest growing insurance markets in Europe. In 2023 alone, personal lines insurance saw an increase in Gross Written Premium (GWP) of around 13% year-on-year to £36.17 billion, while commercial insurance grew 12.5% to £37.51 billion. These increases were influenced, as ever, by macroeconomic factors such as inflation and the cost of living, while 2023 felt, in many ways, like a full return to normality in a post-Covid era. 

Modernising insurance 

The digitisation of the insurance industry has been a significant growth driver for the UK insurance market, thanks in large part to Insurtechs. The adoption of insurtech solutions, including AI, automation, and data analytics, has improved efficiencies and customer experience, leading to more tailored products. 

It’s also proved a magnet for insurtech startups, which have continued to partner with insurers to offer faster, more affordable and more personalised services, particularly in areas like motor and home insurance. 

The UK is a market which my team and I have monitored since our inception in 2018, and we officially entered in 2023 through a partnership with Admiral Pioneer, which, I’m pleased to say, has been a positive move so far. 

Personalisation the key 

So, we’ve talked about current and projected market conditions in the UK, but what about consumer behaviour and demands? The UK is one of the world’s most mature markets for insurance penetration. Recent figures by Global Data show that insurance penetration rates are currently around 10% of the UK’s total GDP.  

There’s also a growing demand for personalised cover to meet the needs of each individual. Recent studies suggest that 40% of consumers in the UK want to purchase cover that fits the way they live their lives and use their products. That’s where insurtechs really come into their own.  

Insurtechs offering API-first, flexible platform technology help provide insurers, MGAs and Schemes with substantial opportunities to build more personalised products. They enable rapid iteration, and the opportunity to integrate data-driven personalisation features. These platforms lower the barriers to creating customised solutions, so insurers can respond to customer needs faster and more efficiently. They also offer insurers the ability to better understand their customers, enabling them to continuously understand and deliver against their needs. 

Many of the UK’s largest insurers, which have successfully operated for decades, are investing in their tech capabilities to adapt to a rapidly shifting environment. If they don’t, they’ll fall ever further behind growing consumer expectations and risk losing out to insurtechs that are able to meet their bespoke needs and demands.  

Navigating regulatory requirements 

The Financial Conduct Authority (FCA) is the UK’s insurance market regulator, and insurtechs looking to invest in the UK market must, of course, be cognizant of the requirements. In the last year alone, initiatives such as Consumer Duty, fair value requirement, product governance, and senior managers and certification regime have either been introduced or updated.  

For any insurtech looking to invest in the UK market, it’s important they consider and understand the evolving regulatory conversation, which is tightening across the board. However, the market is still very receptive and open to investment, for those willing to work with the regulator, and strike up a healthy, proactive relationship. In fact, much of the regulation opens up pockets of opportunity for insurtechs that are able to support increased governance requirements and remain flexible as the rules change. 

The FCA recently launched its 2024-25 business plan, aiming to deliver improved outcomes by becoming a more assertive, data-driven regulator. This strategic shift towards data-driven approaches requires insurers to strengthen their data infrastructure to meet regulatory expectations and will involve making additional investments in technology and training. This puts insurtechs in a very favourable position moving forward. 

Then there’s the ethical application of AI, which is still in its infancy and continues to evolve at pace with clear potential to be a powerful change driver in our sector. These focus on fairness, transparency and accountability. Several frameworks and guidelines are emerging to ensure the responsible use of AI, particularly in areas like decision-making and customer treatment. The FCA, along with the Bank of England, have been involved in setting out governance and oversight standards for AI use in financial services. The focus is on ensuring that AI models used for risk assessments, pricing, and claims management are transparent, fair, and unbiased. 

There is always a balance to be struck when it comes to regulation. If regulation protects the consumer without stifling innovation, my view is that it is a positive development to see the UK putting such frameworks in place. It’s a world that could get out of hand very quickly, so regulators need to consult with the insurtechs, as well as established players, developing and deploying AI systems and asking the hard questions. We need a transparent process and sharing of information. This will help – and is already helping – the market to operate in progressive way with AI and other technological advancements, resulting in a market that is more predictable and investment friendly. 

Overall, the UK presents a growing and mature insurance market, and one that is willing to evolve and embrace innovative new ideas, provided they can prove their value to consumers. There are some areas, such as cyber insurance, which have so much potential, yet have not yet seen as much emphasis as might have been expected. We’re seeing more insurers embrace digital distribution strategies, which is driving demand and investment into insurtechs. We see real potential in the embedded distribution space as more consumers prefer a seamless, joined-up purchase journey that includes insurance over the traditional approach of having to make separate transactions through different companies, which often ends up not happening.  

With an ever mushrooming number of distribution nodes comes an increasingly complex administration, data and governance challenge for insurers. How does an insurer remain compliant, administer multiple levels and nodes of distribution and satisfy an increasingly diverse customer base? The answer lies in technology which enables transformation and growth into this digital and complex future. The growing MGA and schemes markets in the UK are a good example of a segment of the market that could benefit from the next generation of technology to enhance their propositions, their distribution options, as well as their relationships with their capacity providers. 

If you’re keen to invest in new markets, the UK – both now and over the next few years – is an attractive place to start. Root expanded from South Africa to the UK, harnessing our experience in SA’s intensive regulatory and world-renowned innovative insurance environment to bring our solutions to the UK market – and we have received a positive response.  

The UK has evolved into a leading natural knowledge hub for insurance, and we quickly found we could get in front of the people we needed to speak to, because of the strong appetite to innovate and change which exists in this market. It was very much “right time, right place” and is still very much the case – the UK is a great place for innovation, and now is a good time to invest.

About the Author

Charlotte KoepCharlotte Koep is CEO of Root Platform. Joining the business four-and-a-half years ago, Charlotte was promoted to the CEO role in 2024 after successfully delivering the Chief Operating Officer role for just short of four years.