12 The economic backdrop The Brexit effect The InsurTech phenomenon comes at an opportune moment for the in- The UK’s departure from the European Union represents a challenge for surance industry. It is an industry that is facing many challenges including: InsurTech businesses, just as it will impact the wider insurance and fi- nancial services (FS) industry. While London is likely to remain a world-re- • low interest rate and low growth economies, nowned insurance centre, Brexit could undermine its pre-eminence – and • changing and challenging regulation, the uncertainty during the negotiation period is potentially destabilising. • the restrictions of legacy systems and processes, • significant changes in customer behaviours and expectations, In the short term, Brexit has had limited effect – applications to Startup- • poor customer perceptions bootcamp from InsurTech businesses based in other European Union countries actually rose this year, a phenomenon also seen in the FinTech But as Jonathan Howe, Global InsurTech Lead at PwC, wrote recently “this program. Still, the long-term impact remains difficult to predict and there is not an industry in inevitable decline. There is a clear social need for are certainly question marks as to whether talent and investment will still insurance, and the emergence of new risks in a changing world means be drawn to British shores to the same degree that they are currently. there is more need than ever before for individuals and businesses to protect themselves.” InsurTech offers insurers the opportunity to rein- That said, InsurTechs should also recognise that Brexit may offer oppor- vent themselves and meet their challenges head on. tunities, such as the potential relaxing of regulations in order to stimulate innovation. And if insurers, regulators and government are able to work together to continue to allow cross border insurance services post Brexit, there is no reason to think London will not remain an important hub for InsurTech. This is not an industry in inevitable decline. There is a clear social need for insurance, and the emergence of new risks in a changing world means there is more need than ever before for individuals and businesses to protect themselves. Jonathan Howe, PwC