Lab-grown insurtech thrives at Lloyd’s

Lloyd’s of London, borne out of a coffee house in the 17th century, is rightly celebrated for being practically as old as insurance itself. Yet over 350 years on, the corporation is still helping shape the future of the industry with its Lloyd’s Lab initiative.

Launched in 2018, Lloyd’s Lab is a 10 week fast-track, “fast fail” sandbox where new risk transfer concepts and solutions can be tested with the support of experts from the market. Insurtech wannabes also benefit from the use of a co-working space that puts them right in the beating heart of the global insurance market.

In the last five years, scores of insurtech hopefuls have pitched ideas intended to challenge and help the Lloyd’s market do better across the value chain.

In February the winning applications to the programme’s tenth cohort will be announced under three themes: ‘New Products, Data & Models, plus European Cyber & Climate Solutions’.

The new intake has a host of hard acts to follow. Previous cohorts have produced a remarkable alumni roster in the Lab’s short history:

• Parsyl, which claims to be the only integrated supply chain monitoring and insurance solution on the market, uses granular data to help customers manage, mitigate, and insure complex supply chain risks. Since graduating from the Lab, Parsyl has created a Lloyd’s Syndicate and insured over $1bn in global health commodities through the Global Health Risk Facility.

• Kita, an early mover in developing insurance for the carbon markets, entered the Lab in January 2022 and launched Carbon Purchase Protection Cover in January 2023;

• Optalitix developed an AI product that enables insurers to convert any desktop model into an API without any infrastructure or code;

• Scrub AI, a replacement for manual bordereaux cleansing, uses AI to understand spreadsheets in the same way a human would and then cleans the data into a desired output format.

Altogether, the Lab has so far created over 20 new coverholders operating in the market, with over two thirds of 100 alumni still actively working with Lloyd’s players.

Different parts of the insurance value chain – claims, underwriting, distribution, analytics – have been tackled since the Lab doors opened. But Rosie Denée, senior manager in the Lab, says that the last cohort (26 Sept – 7 Dec) saw a shift to more product-focused insurtechs – and faster adoption from the market too: “New insurance products are always really well supported by the Lloyd’s market - we always have a real run of market mentors wanting to support this category,” she told Insider Engage.

Earlier examples include Parametrix, the world’s first insurance coverage for cloud downtime. This year, to meet soaring demand from corporations worldwide, Parametrix expanded its panel of re/insurers, and is now backed through Lloyd’s by TMK, RenaissanceRe, and Apollo’s Ibott Syndicate 1971, as well as by Hannover Re.

Another is Gaia, the world's first IVF insurance provider, which uses data from over a million previous treatments to help individuals understand their chances, and how many rounds they may need, so that they can start the IVF process prepared, without so many financial unknowns.

There’s strong interest around nat cat related insurance products as well, Denée adds, pointing to Floodflash, who offer an Internet of Things (IoT) based parametric flood insurance; Sola, a parametric tornado insurance for homeowners, and Kettle, which offers wildfire coverage with the adoption of a prediction model for the increasingly frequent peril.

Platforms and tools that are aimed at saving manual time are also proving to be very popular with the market, Denée says: “We are in an era where email inboxes are always full, meetings seemingly are eating into more hours of the working day and clients are wanting more from their relationships, with the insurance market often leaving people time poor.”

Denée singles out Tautona AI, which boasts a 50% cut to loss adjuster expenses and five times increase in claims processing productivity. Another, Sotera, offers algorithmic underwriting to the specie, fine art and mid-wealth homeowners market, automating pricing and speeding up claims payments. Layr provides software to insurance brokerages that allows them to automate and digitize distribution and coverage for small businesses.

ClearConnect’s technology allows real-time transparency into how a client transportation company, its vehicles and drivers are performing against the underwriting requirements throughout the term of coverage.

“These sorts of solutions, which are focused on time and resource saving, as well as bringing greater accuracy to every stage of the value chain, are allowing insurers to focus more time on growing their portfolios and the time to proactively partner with clients in mitigating risks and reducing the propensity for claims,” Denée says.

IoT technology, as well as AI, is behind many of the innovations produced in the Lab, Denée says. “IoT is bringing additional data and insights to insurance, which allows underwriters to determine risks more precisely. Arguably more importantly, that granular data that can be captured through the use of IoT can help clients avoid losses, generate insurance savings and improve their understanding of their risk, which ultimately creates a better experience for clients.”

Denée says market engagement has been key to the initiative’s development over the last five years: “It’s been really pleasing to see the support and investment from the market for the Lab. Over 42 managing agents from the market are involved in the Lab in some capacity.

“We are now seeing a lot in interest from governments and clients across the globe in the Lab and our alumni. It is a true testament to how creative and impactful our alumni solutions are that we’re receiving these requests,” she adds.

The Lab also recently partnered with the UK risk manager association Airmic to bring in corporate risk professionals as mentors for the first time. “As the voice of the customer is a very important part in creating meaningful insurance products, we felt that including clients in the Lloyd’s Lab programme was a natural evolution to the programme.”

Asked how the Lab has benefitted Lloyd’s and its franchisees, Denée says the unit has established itself as the market’s heart of innovation: “In an era of increasingly volatile risks, Lloyd’s needs to be adaptable and increase its relevance to customers whose risks are changing. The Lloyd’s Lab brings fresh perspectives, technology and clients to the Lloyd’s market within a collaborative approach.

Five years in, the Lab’s management won’t be resting on its laurels, Denée says. The team will be looking to broaden engagement via partnerships with innovation centres in other industries, customers and subject matter experts, for example, and strengthen its brand to attract more mentors.

“Ultimately what we want to do in 2023 is amplify our current model and help develop solutions to our customers’ biggest challenges,” Denée says.

The soon-to-be-announced tenth cohort expands the Lab’s remit geographically for the first time, setting a European theme. “The first regional theme is focused specifically on developing solutions to help address Europe’s well-documented cyber and climate protection gaps. Lloyd’s Europe wants to explore insurance solutions that support its customers and close these gaps by leveraging the connections and offices we have around Europe – and the Lab is the perfect platform for this,” Denée explains.

“Learning from the European theme, we hope to expand more broadly into other geographies over the next couple of years as there are a lot of specific challenges that the market would like to address, and pools of talent that can help them to do that.”