The Crown Dependency talks to this publication on how it is positioning itself in the current difficult environment and discusses a sector it wants to develop - insurance technology, or "insuretech". And inevitably, there's Brexit.
The insurance sector, thrown into sharp relief by the global pandemic, is important in financial centres worldwide. Risk management is the name of the game. And an emerging part of insurance holds promise for the Isle of Man: “insuretech”.
The term, a compression of insurance technology, may appal English language purists, but expect to hear and read more about it in the Isle of Man, as the Crown Dependency works on staying diversified. The term insuretech applies to entities such as apps that capture and track a person’s insurable possessions, or which enable a person to buy insurance at short notice and “on demand” for a particular activity without having to deal with laborious paperwork, for example. Such tech can also generate quick quotes, premium rates, give indications of risk, flag problems and so forth.
And the jurisdiction reckons that it is well placed to push forward into emerging business areas. It likes to point out how in June it became the first part of the British Isles to relax social distancing rules imposed initially to handle COVID-19. Although aware of the continuing virus dangers, policymakers on the island say it has withstood the challenges.
“We have a natural resilience here, with strong technology, communication and regulatory stability,” Michael Crowe, chief executive of Finance Isle of Man, told WealthBriefing in a recent call. This news service visited the IoM a year ago and was keen to re-connect after a year that has hurtled past.
Insuretech is certainly an area that the island will pay attention to, he said.
Already, life insurance is one of the largest single sectors on the Island with more than 2,000 people working in the industry. The island is home to 12 authorised life insurance companies that are leading or top-three ranked in serving customers worldwide.
“There are opportunities for the Isle of Man to build an ecosystem where insuretech flourishes. We have a very strong insurance community here already. It is a natural fit for what we should do next…we are excited about that,” Crowe said.
“The Isle of Man is constantly looking at new opportunities, as an example we have one new bank launching later this year with an innovative digital proposition,” Crowe said. (It is too early in the process for the island to be able to identify insuretech businesses by name.) In the UK, firms in the space include Zego; Tractable; Kasko; Flock; Wrisk; Digital Risks; Instanda; Spixii; Deemly; Cuvva; and Laka (source: Computerworld, February 2020).
Getting into new areas is a constant process as IFCs such as the Isle of Man compete against others to retain business, particularly as wealth managers and others review options in an unstable world. A location such as this island, with its low-risk politics and legal stability, has obvious appeal, even if it lacks blazing sunshine or Alpine peaks.
The IoM financial services sector makes up about 40 per cent of its GDP and, while very important, is not all-consuming. That diversification remains a feature of the Island.
“We are lucky here that the economy has a degree of resilience built in,” Crowe said, acknowledging that conditions have been tough on the island’s tourist trade.
Pandemic or no pandemic, WealthBriefing asked Crowe about Brexit, and how that saga is being viewed in the island.
Crowe said the island was in the “slightly odd position” of never having been an EU state in the first place, but part of the British Isles. His choice of words was cautious. (As of the time of publication, the UK government’s haggling with the EU over the terms of a withdrawal agreement continues.)
“Our industry has a significant international outlook and it will be interesting to see what opportunities arise. There are opportunities for the Isle of Man depending on the nature of the deals struck between the UK and other jurisdictions. We could be used as a route for certain services to get into the UK in some way,” Crowe said.
The jurisdiction remains important in areas such as aviation and high-end engineering – so there is more to the place than investments and fintech. There could be some difficulties caused by the big cuts to worldwide air travel; on the other hand, engineering talents and skills remain in play, particularly as and when global supply chains change.
The global pandemic has hit jurisdictions of all sizes, while global politics and social trends have arguably added a premium to places that are perceived as stable and peaceful. Having been the first British Isles jurisdiction to remove lockdown rules, the Isle of Man knows that the reverberations of COVID-19 will affect it, and other IFCs, for months if not years to come.