UK 2020 Budget good for insurtech innovation
Key industry figures have welcomed measures in the UK 2020 Budget which they say will support insurtech innovation.
In particular they have welcomed news that the rate of research & development expenditure credit (RDEC) will increase from 12 percent to 13 percent from April 1 2020. The Budget also sets out plans to increase public R&D investment to £22 billion per year by 2024-25.
Tim Hardcastle, CEO and founder of insurtech INSTANDA, said: “As an insurtech, naturally we are supportive of anything that promotes innovation, particularly within the insurance industry. It’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.
“Whilst the help is of course welcomed and will be important for the insurance industry, I believe that there is more that could and should be done from within to foster innovation, stimulate growth and frankly be a better industry all in all. In particular, insurance carriers need more options available to them to address the challenge of creating secure and scalable technology solutions. This 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.
“Over 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increase in insurers recognising the importance of working with insurtechs to drive digital transformation and bypass outdated legacy systems.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.”
Insurtech UK, an insurtech trade association of 102 members, associate and partner members, added its support for the measures within the Budget to address R&D tax credits, plus enterprise management incentive (EMI) options, insurance premium tax (IPT) and VAT for financial services.
“These are all issues that Insurtech UK are already engaging with the government about and their inclusion offers a fresh opportunity to secure reforms to these areas for the benefit of insurtech startups,” it said in a statement.
“Of prime importance for Insurtech UK is that the government continues to support Britain'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 is the most attractive place in the world to set up an insurtech business.”
Insurtech UK also stated that in the lead up to the Budget, it had been in correspondence with officials at HM Treasury in order to express the sector's concern about the scrapping of Entrepreneurs Relief.
“Whilst the changes will undoubtedly have an impact on some Insurtech UK members, we are satisfied that the government has listened to the concerns raised,” it said. “The reform to reduce the lifetime limit from £10 million to £1 million is some form of compromise, given that the Budget has outlined other additional initiatives to support start-up businesses.”
