London has been the global epicenter of innovation in the insurance industry since the 1600s, when Lloyd’s of London was established. Today, the United Kingdom is positioned as a global leader in the field of insurtech. A flourishing ecosystem of start-ups, investors, and incumbents are working together to drive innovation and growth in the industry, from artificial intelligence and machine learning to the Internet of Things.
London has the same number of insurtech unicorns as the rest of Europe combined and globally is second only to Silicon Valley. Indeed, of the estimated 3,000 insurtech firms in the world, approximately 280 are located in the United Kingdom—the highest number of insurtechs per capita among all major world economies.
However, the United Kingdom’s insurtechs have not been immune to the recent global tightening on valuations. The multiples of some of the most successful publicly listed insurtechs fell from 15 times those of traditional peers to below the level of incumbent insurers, according to McKinsey analysis, and private capital funding decreased 32 percent compared with the peak in 2021. Competition from Big Tech and other non-insurance companies has also accelerated. Amazon launched the Amazon Home Insurance comparison site in the United Kingdom, and Tesla Insurance reached $300 million in premiums by the end of 2022, leveraging Tesla’s data availability and large customer base for better underwriting and distribution.
Despite these global challenges, the UK insurtech sector has remained resilient, employing around 14,000 full-time-equivalent workers—almost 4 percent of the total UK insurance workforce, according to our estimates. We estimate the sector brings in £2 billion to £3 billion in revenue per year—though we calculate its full (direct and indirect) impact on UK GDP to be closer to £5 billion and 60,000 jobs. Not all of these jobs are in London—we found that 31 percent of the country’s insurtechs are outside the capital.
Insurtechs also help increase diversity and inclusion in insurance through their young, diverse, and well-educated employee base. Approximately 39 percent of staff are non-British, and about two-thirds are younger than 40, according to our research.
The industry still faces key challenges that need to be addressed to ensure continued success, including protecting and enhancing the United Kingdom’s innovation ecosystem, especially access to talent and capital. Through a thorough review of the UK insurtech landscape, this report aims to provide context, new survey and research findings, and practical, actionable insights for all stakeholders. These recommendations can serve as a road map to drive success for insurtech firms, insurance industry incumbents, and investors, with a particular focus on addressing the industry’s biggest challenges: access to capital and talent, scaling, and the current macroeconomic climate.
Undoubtedly, insurtechs have the potential to ignite transformative change within the insurance industry. One CEO we surveyed described the insurtech sector as the “grit in the oyster”: just as irritants provoke oysters to produce pearls, insurtech firms have the power to disrupt the status quo, stimulating traditional insurers to embrace innovation, foster product development, and extend coverage to previously underserved population segments. This dynamic interplay encourages healthy competition and pushes the industry toward a more inclusive and customer-centric landscape.
