The Lloyd’s Lab mentors are a group of people from the market and from Lloyd’s itself who have a particular interest in innovation, fintech and start-ups. They give up their time, as part of the Lloyd’s Lab programme, to help input into the product planning, pricing and testing for new customer solutions; each working with a chosen start-up to develop an idea and bring it to market rapidly, effectively and to the collective benefit of all sides.
“The Lab was an invaluable opportunity to engage with mentors who provided the best market feedback. We worked together on various ‘mini proofs of concept’, which helped us sharpen our value proposition and product positioning. Today we continue to work with insurers from Lloyd's and we still turn to the Lloyd's team for networking and new projects”Ori Cohen – Cofounder and COO, Parametrix
The input of the mentor firms is critical to the entire innovation process, they share their expertise to help bring transformative ideas to market. Mentors may have a specific focus, such as underwriting or pricing, or they may have a wider understanding of commercial insurance to share. Each of them represents an organisation in the London market, meaning that they are directly plugged into live underwriting, claims, risk management and customer scenarios. They can provide real-world expertise to young companies with new ideas for improving insurance services and products.
Together, the mentors and the start-ups create a dynamic platform for innovation, a space in which insurers can see what is happening in the markets outside their own world; and one which gives an opportunity for them to test ideas on an informed audience. While the start-ups that come into Lloyd’s have great ideas, they often lack a deeper understanding of how the Lloyd’s market works. The opportunity to work with mentors who have a huge understanding and experience of the market is invaluable.
Ed Gaze, who used to run the Lloyd’s Lab, summarises the huge value to be gained from the process. “Start-ups and scale-ups bring to our market new perspectives on risk and see new ways that we can go about mitigating that risk. The Lab gives mentors the opportunity to explore investing capability in these ideas in a way that is protected and time limited.”
As Ed explains “crypto currency and non-fungible tokens are new risks that the market currently does not have fully rounded solutions for. Two start-ups in the current 2021 Lab cohort are crypto-focused and this gives the whole market a meeting space in which to work practically with subject matter experts on what products can look like in this area. That is a huge innovation value.”
There are many other products where this kind of shared thinking moves the dial, and Parametrix is an example of how the cooperation between start-up and established players can accelerate a highly relevant new insurance product for customers.
Parametrix entered the Lloyd’s Lab to develop their new product idea - innovative business interruption cover for companies when business-critical, cloud-based services go down. Traditional cover focuses on the physical threat of risks such as floods, but the more intangible risks around data outage events often lead to a loss of access to third-party services such as cloud computing and cloud storage, SaaS accounting, payment gateways, stock or client databases, or e-commerce platforms. Parametrix monitors the availability and performance of all the major cloud data centre providers and pays out directly to the client when they detect an outage event, without the need to make a claim. The policy pays out an agreed amount once an outage has been going on for more than an hour, then adds to it in increments of fifteen minutes. The amount paid is based on the client’s own pre-agreed assessment of the amount of money lost per hour during an outage of a particular service.
The Parametrix team were seasoned tech start-up professionals, but with little or no experience of the insurance market. They had already begun the process of speaking to reinsurers, but for them, time to market was a critical factor. The Lloyd’s Lab provided Parametrix with a way to analyse how they could leverage their technological capabilities to what the insurers needed at each stage of their product development process; accelerating them from idea, through modelling and actuarial analysis all the way to launch. It also gave them an understanding of the technicalities of the Lloyd’s market and connected them with potential capacity providers.
Once the concept came into the Lloyd’s Lab, the established insurers in the market demonstrated their enthusiasm for the idea straight away. Over a dozen insurers and reinsurers signed up to work with Parametrix during the Lab programme, and all sides benefitted from learning sessions that gave the mentors insight into what could be achieved to risk manage business interruption during downtime, whilst also allowing insurers and reinsurers to input on how the original idea could become a viable insurance product. The mentors involved commented that “the team were constantly listening, taking on feedback, and then changing. I loved the passion and the rapid-fire energy that they brought us.”
Working with mentors and with the Lab’s help, the product was live in three months, and its value was demonstrated very clearly in September 2021, when a worldwide Facebook and Instagram outage took down the e-commerce capabilities of millions of businesses worldwide: showing how the giants many rely on can go down and that there is a need for exactly the kind of insurance product Parametrix have designed.
Parametrix themselves say that “the input of the mentors helped hugely to develop our idea and model it as a valid insurance product.” Meanwhile, one mentor commented that: “What impressed me the most about Parametrix was their ability to assess the needs of our market and come up with such an elegant and relevant solution. Without doubt we learnt as much as we contributed through the mentoring process.”
About Lloyd’s Lab
Lloyd’s Lab is the home of Insurtech at Lloyd’s.
Learn more about how the Lloyd’s market enables innovative ideas and creates lasting partnerships.