The UK Insurtech Board, an initiative facilitated by Tech Nation as part of the Fintech Delivery Panel (FDP) convened by HM Treasury, has announced the launch of a new toolkit of legal documents to assist start-ups in building relationships with insurance incumbents.
The suite of legal documents was developed to address the lack of legal support or consistent requirements that insurtech ventures frequently deal with when entering discussions with potential corporate partners, the Insurtech Board said.
It was produced in partnership with law firms Dentons and Simmons & Simmons and can be accessed by insurtechs for no cost from the Tech Nation website.
The documents cover many of the contractual and commercial relationship issues that arise in negotiations with potential partners, including a non disclosure agreement, a terms of business agreement, an appoint rep agreement, and amendments for an MGA agreement.
Coordinated by Tech Nation and supported by HM Treasury, the Insurtech Board was established in 2018 to help identify and solve problems related to insurtech innovation.
It brings together representatives from across the insurance industry, including leading incumbents, insurtechs, brokers and trade bodies, to promote talent, knowledge sharing, best practice and innovation in the UK insurtech sector.
“We’ve been encouraged by ever-growing willingness and interest from insurance companies to work with innovative startups as a means of driving innovation, but it’s clear that standard legal issues can stand in the way of collaboration,” said Tech Nation Chair Eileen Burbidge, who is also HM Treasury Envoy for Fintech and chairs the FDP.
“The insurance sector has its own contractual norms and practices and without legal support, early stage businesses are disadvantaged in drawing up and negotiating documents that meet the expectations of potential partners,” she continued.
“This new toolkit addresses that problem. Conforming to industry standards, they can be downloaded free of charge and used as a legal underpinning to negotiations.”
The announcement came alongside new data from Dealroom, showing that UK insurtech companies attracted $1.7 billion in investment in 2018, while the broader fintech area attracted $30.1 billion.
Will Thorne, Chair of the Insurtech Board and Innovation Lead at the Channel Syndicate, also commented on the launch: “I am proud to chair this industry group and am delighted we have now launched the toolkit.
“Insurtechs operating in the UK will benefit directly from the output of this collaboration between startups and incumbents. The Board will continue to seek solutions to the most pressing problems in the UK insurance sector, always striving to keep insurtechs at the heart of our mission.
Meera Last, Programme Manager at Tech Nation, further stated: “When I joined the secretariat of the Insurtech Board, I was keen to ensure the group delivered some tangible work that would directly support the UK’s growing insurtech ecosystem. Created in the hope that insurtechs will be more able to seek meaningful partnerships with large incumbents, I am really hopeful that these documents will be a useful resource for all.”
“Doing something new and innovative usually requires a flexible approach, where traditional corporate tools and processes often come up too cumbersome/ heavy handed,” remarked Lidia Bozhevolnaya, Head of Strategy & Corporate Development at Hiscox.
“It is therefore delightful to see that there is now a whole toolbox of onboarding documents available that are targeted at facilitating collaboration between us, insurers, and insurtech start-ups. These template documents serve as an excellent starting point for getting various agreements in place. They give everybody a head start to the process.”
Phoebe Hugh, CEO at Brolly, added: “We established these standards to support and encourage the development of insurance startups in the UK, by developing practical guides and documentation to navigate the regulatory and incumbent landscape. I’m delighted to be supporting this industry-led initiative.”
Martin Mankabady, Partner at Dentons, also commented: “The standard documents cover all the key issues to be considered and represent a balanced starting point for negotiation; it is hoped that the documents will smooth the path of such negotiations and, in the process, reduce friction, time and cost.”
“This will enable the relevant parties to focus on the key commercial issues,” he explained. “This is one example of how key stakeholders have risen to the challenge of the UK Government to make the UK a centre of excellence for Insurtech; moreover, the stakeholders are committed to making the UK not only one of the most attractive places for investment but also one of the easiest places in which to do business.
Finally, Pollyanna Deane, Partner at Simmons & Simmons, remarked: “The world of insurance can be pretty arcane and steeped in jargon. As the Insurtech Board, we wanted to help new entrants. Too often, the start-ups feel at a disadvantage, through lack of knowledge or lack of clout.
“The insurance industry is familiar with standard forms. These agreements draw on collective experience and I believe, provide a reasonable starting point for any negotiation. As they gain familiarity, it should be easier to see positions that are being taken contrary to common practice or which force substandard terms on a party.”