Shifting the Paradigm: How Relm Helps Risky Businesses Innovate

Business Reporter: Traditional insurers often rely heavily on historical data to assess risk. Why did Relm break from that model, and how do you underwrite risk in industries where risk data doesn’t exist?

 

Claire Davey: Relm was founded to provide insurance, and the resilience brought by it, to innovative industries like crypto, alternative therapeutics and fintech. Traditional insurers have shied away from these opportunities due to the absence of historical actuarial data specific to these industry segments. However, the future commercial relevance of the insurance industry is dependent on insurers finding a way to get to “yes” when reviewing these emerging risks.

 

Relm has developed its underwriting decisions and models by drawing on other relevant and analogous data sources to gain understanding about loss histories, aggregation concerns and regulatory fines and penalties.

 

We compensate for the absence of traditional actuarial data with a deep understanding of the technologies that we’re underwriting. And we supplement this knowledge with controlled pilot initiatives, technical analysis, cross-disciplinary expertise and partnerships with relevant data providers.

 

Risk data does exist for these industries. It just doesn’t fit the traditional models that insurers want to see.

 

Are we complementary to traditional insurers? I’d argue we’re fundamentally disruptive, not because we aim to displace others, but because we’re creating capacity in markets where others have failed to step up.

 

BR: How does your approach to insurance support the resilience of emerging industries, especially when these industries often operate in highly volatile markets? How does Relm’s model turn “uninsurable” and “unknown” risks into viable business opportunities?

 

CD: Innovation doesn’t happen in a vacuum. It needs infrastructure, credibility and investment behind it. By definition, innovation changes things fast, and regulators can scramble to keep up. As a result, their responses can sometimes be aggressive, particularly when it comes to innovations in industries that have a direct consumer relationship.

 

Insurance increases certainty and reduces risk, making businesses in innovative and emerging sectors a more attractive proposition for regulators as well as for end customers, commercial clients, investors and managers.

 

At Relm, we work closely with all these stakeholders to understand what resilience looks like in each context. For example, through our discussions with FinTechs and their brokers, we’ve learned that they’re concerned about the risk to their balance sheets and operations resulting from regulatory investigations. They worry about the liabilities arising from AI adoption. And they fear that valid claims may not be paid if they fall between the cracks of multiple insurance policies with different insurers. These insights have shaped two of our latest products, OMEGAFINTECH and NOVA FINTECH.

 

BR: What types of financial services risks are these products designed to support, and why are they needed?

 

CD: Our research showed us that insurance providers are not keeping pace with the risks faced by fintechs. Most insurers don’t understand fintech beyond payments and banking apps. We’ve sought to address this with the recent release of these two new products.

 

OMEGAFINTECH is our blended insurance policy, providing seamless coverage for businesses that provide financial services through online technology, including digital banks, crypto exchanges and buy-now-pay-later platforms. It covers liabilities arising from financial services and the technologies (including AI) used to deliver those services. The policy also covers network security and privacy breaches. It does not matter whether the claim arose from a staff error, a technical failure or a cyber-attack; cover will be in place.

 

With this product, all the risks are contained within a single insurance policy. This eliminates the danger that a particular claim falls between the gaps in different policies and becomes a dispute between insurers about which one should respond.

 

NOVAFINTECH tailors Relm’s technology errors-and-omissions product to address the emerging cyber, liability and regulatory risks faced by fintech companies that provide services to financial institutions. With this cover in place, the fintech’s customers know that if something goes wrong, insurance payments will be available. 

 

BR: Technology in the financial services sector is changing rapidly. How does Relm stay ahead of the rapidly evolving risk landscape when even regulators and legislators are playing catch-up?

 

CD: We do this in several ways. First, we invest heavily in sector-specific research and development. We have a dedicated Innovation and Emerging Risk team whose sole focus is to monitor and research risk in these sectors and develop solutions that address emerging client needs.

 

We also invest in domain knowledge. Our underwriters, who are performing the risk selection and pricing of risk, are not generalists: they are domain experts with deep industry exposure to blockchain, AI, digital assets and the fintech stack.

 

And we maintain ongoing, close dialogues with industry stakeholders, including founders, VCs, lawyers, regulators and data experts. This means we can map and understand where the risk is moving before it shows up in the headlines.

 

Insurance, in our view, should not lag behind innovation. It should help shape the rules of engagement for emerging markets and help provide an informed perspective to those who want to know more.

 

BR: How will the role of insurance further evolve in the short term, particularly as AI-powered autonomous systems become more prevalent? And how will Relm respond to this change?

 

CD: I think the insurance industry will see considerable challenges to its relevance in the next three to five years, if it doesn’t adapt quickly and flexibly to technological innovations. It needs to transform from a passive safety net to an active enabler of innovation.

 

That means becoming data-driven across the board: not just in underwriting, but in every aspect of decision-making. It means developing genuine AI literacy with a clear understanding of how machine learning and automation are reshaping exposure to risks. It requires embedding insurance into digital ecosystems, including decentralised infrastructure, so that protection is available at the point of need, not days or weeks later. And it calls for flexibility so that risks that are yet to be fully defined can be insured, because many frontier industries are still writing the rules as they go.

 

Most importantly, it means staying close to clients and their innovations. This will be the key source of competitive advantage in a market increasingly driven by automation and relationships, rather than just capital.

 

Relm is proactively driving the evolution of the insurance industry, rather than responding reactively. Because of this, I feel that we are the insurer best positioned to win in markets driven by tomorrow’s innovative and emerging technologies.

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To learn about Relm Insurance’s cover for emerging industries, read more here.