Big fall in insurtech funding in Latin America

Insurtech funding in Latin America has fallen to a historic low of $26m in the first half of 2024, a 78% decline in investment compared to the same period in 2023, according to a report compiled by Digital Insurance LATAM and sponsored by MAPFRE. For the period between July 2023 and June 2024, the total amount of insurtech funding in Latin America was $43m, the lowest figure on record.

The report said: “Despite this stark downturn in venture capital investment, the insurtech ecosystem in the region expanded by 6%, with a total of 498 startups. Considering a 10% mortality rate, organic growth reached over 16% in the past 12 months, with 77 new insurtech ventures.”

Breaking down the total number of startups in the region, Brazil leads with 203, followed by Chile (72) and Colombia (67). The Pacific region shows the highest percentage growth, notably Central America (69%), Ecuador (35%), Colombia (24%), and Peru (23%). The report noted that Peru (63%), Ecuador (48%), Colombia (43%), and Mexico (31%) are the Latin American countries that draw the most foreign insurtech companies.

Some 53% of insurtechs focus on distribution, marking a 6% decline from 2020. Despite this, distribution continues to dominate, though other business models are increasingly being explored, said the report. Most distributors specialise in personal lines, such as auto and home insurance, with broker and MGA models comprising 42%.

The report said that enablers make up 47% of the total, and of those, 18% offer solutions for digitalising traditional intermediation, 14% specialise in claims management solutions, and 6% focus on fraud detection.

Hugues Bertin, CEO and founder of Digital Insurance LATAM, said: “The insurtech ecosystem in Latin America shows remarkable resilience. Despite limited funding, the mortality rate has dropped from 13% to 10%, with Argentina notably rebounding (+6%). I’ve never seen such enthusiasm in these countries to collaborate with insurtech startups. Initiatives like the Pacific Insurtech Alliance and other associations will continue to co-create the future of insurance, bridging both these innovative players and all traditional stakeholders, including major insurers in Latin America.”

Carlos Cendra, scouting & investment lead at MAPFRE Open Innovation, added: “It speaks volumes about Latin American entrepreneurs that, despite limited investment, the ecosystem remains firmly committed to creating and fostering new startups to drive sector growth and narrow the insurance gap. Latin America is remarkably resilient and a highly attractive region for both local and international investors.”