Incumbents and start-ups working together in harmony is key to achieving the best possible innovation in the insurance sector, attendees heard at this year’s Guernsey Insurance Forum in London.
Speaking on the second panel, creating a suitable environment for unicorns, James Sore, chief investment officer of Syndicate Room, suggested that historically, start-ups had not been able to engage and make progress with incumbents around implementing their ideas and technology, “but the pressure nowadays to adapt and develop meant that incumbents are more open than ever to interacting with start-ups”.
Sore explained: “What works really well is when it’s constantly evolving and both start-ups and incumbents are dynamically changing what they need to design and invest in.”
He added: “A good few years ago there was a disconnect between the start-ups and the ability to actually make their new companies and ideas relevant. When it really takes off is when the incumbents are brought into that process, so they can actually implement the concept.”
“The incumbents, the big existing providers, are still around for a reason – because they manage risk, but you also have the start-up mentality of ‘I can do anything and change the world’. It’s about finding the balance between the two. You get the best innovation when you combine an incumbent working alongside the start-up environment.”
Speaking on regulation, Sore suggested that it should be “reassuringly difficult” for a new company to get regulated as the process helps “weed out” the wrong types of behaviours and filter out ideas that are not particularly solid.
He added: “If things are too easy, you end up running too much risk and you don’t necessarily reap the benefits. It should be reassuringly difficult, but navigable. There should be a clear way to get to these people [regulators] and you should have the information to give yourself the best chance, but it shouldn’t be an easy process.”
Agreeing with Sore, Caroline Bradley, deputy director of the Insurance Division at the Guernsey Financial Services Commission, said it was important to “strike a balance between regulation and encouraging new ideas”.
Bradley added: “As regulators, we need to be careful that we don’t become a deterrent to new start-ups. We need to recognise that these new technologies can enhance the customer experience, but be aware of the risks as well as the opportunities.”
“It may be a great journey to buy the product, but how do we then look after the customer afterwards and deal with complaints? We don’t want to stifle innovation but at the same time, we’ve got to think about the risk to consumers and the financial world generally.”
