Insurtech funding rises by 248% in Q2

Investment in insurtech rose to almost $1bn in the second quarter of 2017, an increase of 248% on the previous quarter, thanks to a record number of deals.

In total there were 64 transactions, the most experienced in any quarter to date and almost double the 38 that took place in the previous quarter.

The figures were produced by global broker Willis Towers Watson (WTW) along with consultant CB Insights, which cites a record number of transactions and some large investments in carrier-sponsored startups as the key reasons for the leap in funding.

Furthermore, $289m of the $985m in investment came from (re)insurers, another record. Several startups now count multiple (re)insurers as strategic investors while a number of carriers’ own insurtech startups attracted significant funding, including Acko General Insurance, the digital-only venture aiming to disrupt India’s insurance industry, which won $30m in series-A funding in May 2017.

The biggest fundraising deal for a carrier-sponsored venture was the $230m raised by UK-based Gryphon Insurance in June 2017 for its tech-driven critical illness and income protection offering.

Geographically, the biggest change in terms of insurtech funding has been the emergence of other countries beside the EU and the US, which has seen its share drop from 65% to 45%. For example, a number of China-based ventures focused on online distribution have attracted significant capital in recent months.

While life and health insurance ventures still account for the majority of insurtech funding, having increased the most both year on year (113%) and by quarter (347%), there were more transactions in P&C-related ventures, which accounted for 34 in all and also enjoyed significant growth in volume both year on year (71%) and by quarter (127%).

The new area of focus for insurtech ventures though is in claims management, says WTW. The report highlights a number of claims-based startups that have attracted investment from (re)insurers.

The claims process will become an increasingly important part of a more customer-focused insurance market says WTW, by virtue of the fact that the conversation with the client around a claim provides the greatest insight and opportunity for risk mitigation.

“We believe claims management could assume additional prominence at the expense of other functions including distribution, underwriting and capital management,” says Rafal Walkiewicz, CEO of Willis Towers Watson Securities.

“Effectively harnessing this conversation through technology, whether developed internally or through partnerships or acquisition, will be a key source of differentiation for incumbents going forward.”