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Insurtech taster


27 April 2017

Regulators are catching on to the idea that the rise of insurtech will require a different approach to regulation in many areas. This Taster looks at some of the FCA’s and EIOPA’s current and future projects that are relevant to the insurtech community.


In May 2014 the FCA announced the launch of its Project Innovate, an initiative designed to further the aims of the FCA through innovation, both by encouraging innovation in the interests of consumers and by promoting competition through disruptive innovation. A Call for Input was published in July of the same year, followed by a series of round table discussions the following month. This led to the Innovation Hub, the FCA’s centre for innovation, going live in October 2014.

Innovation Hub

In a speech to launch the Innovation Hub, Martin Wheatley described it as, “Not just a fad…an important part of our regulatory philosophy.” The Innovation Hub aims to give direct support to innovators by providing informal steers on how to navigate the regulatory regime applicable to them, providing additional support at the authorisation stage and by working with firms to test innovative tools. It also aims to provide a centre for considering how the regulatory regime should be adapted to foster innovation, by identifying policies and processes in order to support innovation.

Although this is not an insurance-specific initiative, it is clear that insurers can benefit from this approach – the FCA has signalled its intention to give firms space to innovate with more regulatory support and the opportunity to test products without the same level of regulatory scrutiny that may otherwise be expected. This applies equally to insurance firms as to other financial services firms.


The FCA has also been keen to get involved with RegTech, with the aim of delivering regulatory requirements more efficiently and effectively than can currently be done. The FCA has held two “TechSprint” events (more commonly known as “hackathons”) at which developers and organisations worked across two days to suggest ideas to improve regulatory reporting and access to financial services. There are two more TechSprint events planned so far, one of which is a follow-up to the 2016 event on regulatory reporting. It is likely that these will be an ongoing feature of the FCA’s approach and could lead to some interesting developments.

Regulatory Sandbox

The FCA’s Regulatory Sandbox is designed to allow businesses to test out products in a live environment. One of the issues the FCA acknowledges faces firms trying to innovate in the financial sector is the cost involved in getting authorised in order to have the right permissions to test out their products. By allowing sandbox firms to get authorised for the limited purposes of the sandbox test, it is intended that innovators will face fewer hurdles in getting their products to market. Once authorised, the FCA will give individual guidance to the sandbox firms on how their rules will be interpreted in the context of the sandbox test. The sandbox will also allow authorised firms to get clarity on how the rules might apply to new products they want to launch.

Although the first cohort of sandbox firms involves a lot of start-ups, a couple of more established firms (HSBC and Lloyds) have also used the tool. This shows the range of innovators that the FCA is looking to attract with the Regulatory Sandbox.


The FCA has signed co-operation agreements with the Australian Securities and Investments Commission (ASIC) and the Monetary Authority of Singapore (MAS). For companies which are eligible for the Innovation Hub and are seeking to enter the Australian or Singapore markets, the agreements provide a referral mechanism, with the relevant regulators providing support to help them get to market. The same is true for companies eligible for ASIC’s Innovation Hub and MAS’ Financial Technology and Innovation Group and looking to enter the UK market.

A lighter co-operation agreement has been signed with the Korean Financial Services Commission, whereby information about financial services innovations in their respective markets will be shared.


The FCA has clearly been ahead of the curve in regulators getting to grips with innovation, though its efforts have been mainly aimed at the general FinTech market, rather than specifically Insurtech. In contrast EIOPA (the European Insurance and Occupational Pensions Authority) has, as would be expected, started to focus more on Insurtech in particular. In October 2016 at its annual conference, EIOPA announced that it would be organising a series of Insurtech round tables in 2017, looking at innovation, the benefits and risks to consumers and possible obstacles to good practice. Please look out for our updates following these round table events.