Innovation focus: Howden Ventures’ Tom Hoad

At Howden Ventures, Tom Hoad has a brief to innovate and facilitate insurance innovation.

Innovation is not something that comes easily to the insurance industry. As the Voice of Insurance podcast host Mark Geoghegan emphasised in his introduction to a recent episode, featuring Tom Hoad, Head of Howden Ventures, the sector has found it notoriously hard to do, not least because insurance tends to incentivise the direct opposite – stability and predictability – that can be drawbacks as well as qualities.

Despite this legacy, insurance has started to invest more in people with a focus on innovation, and in assessing performance measured more on whether they can bring forward the next generation of products, rather than merely keeping a lid on initial loss ratios.

Tom Hoad has a background as an underwriter but he is accustomed to being tasked with encouraging innovation. At Howden Ventures he is combining seed and venture funding with distribution and the ability to underwrite through the Howden Group’s DUAL MGA underwriting platform. Or, to put it another way, Mark describes him as “a real expert in innovation and a master of herding the cats of the market behind a common vision”.

“What I’ve found in my career is that this market needs to inject a lot more entrepreneurialism into it,” Hoad said. “That’s from our own staff, but it’s also from entrepreneurs that come from outside our industry, who have a new fresh perspective on how to look at risk, and what kind of tools techniques and technology they have to try and evaluate and understand risk in a novel or a client-pleasing way.”

Howden Ventures was “born from this necessity”, he suggested.

“I think it’s an important step that the market needs to make, to ensure that we’re professionalising how entrepreneurs can work with us as a community, and how we can evolve our own ecosystem to do a better job for our clients,” he said.

He thinks the market has turned a corner to being more innovative with a longer-term focus.

“We’ve been making incredible progress,” he said. “As I look around the market, I couldn’t be more proud of some of the other initiatives that frankly, I’ve had nothing to do with, but I think there’s a real culture now, in and around Lloyds, and around London. We’ve got a big and growing community of people who really understand the value of the longer term.”

He explained the theory behind ‘Ventures’ and how it works to progress innovation, through MGAs specifically, which links to the Dual part of Howden Group’s business, as well as partnering insurers providing capacity at the ready.

“Ventures is a professionalising of the innovation space. What Howden Ventures does is it takes into account a certain tranche of innovation and really tries to professionalize the way that we bring that together,” Hoad said.

“We’re interested in working with external entrepreneurial talent who want and are creative enough and have the tenacity to start their own business. First of all, they need money, and we have investment funds to deploy, to take a minority stake in their business, to help them build out the technology or their proposition,” he said.

“Alongside that, we have a platform that incubates their idea with them. It’s very unlike a traditional VC model. We are ‘in the weeds’ with what these entrepreneurs want to do and how they want to achieve it,” Hoad continued.

“Fundamentally, it’s an investment strategy, looking to build MGAs, that are too nascent and too early in their journey to become MGAs. The way we do that is that we’ve worked with our markets – our partner insurers, we call them – to set up a platform where we immediately have underwriting capacity to deploy,” he added.