- Swiss Re Institute estimates global insured catastrophe losses of $31bn in first half-mostly from secondary perils
- Swiss Re issue sigma headed "Machine intelligence in insurance: insights for end-to-end enterprise transformation"
- Lloyd's Lab selects ten new InsurTechs for fifth cohort focused on COVID-19 risks
- Marsh reports global average commercial insurance prices increased 19% in second quarter
- Prudential plc highlights resilient Asia operating profit-to separate Jackson in US
- Berkshire Hathaway boosts insurance underwriting earnings
- Ageas chooses SSP Intuition solution expired
- Duck Creek launches IPO expired
- InsurTech Sprout.ai releases claim settlement solution for health insurers globally, utilising Contextual AI expired
- CII and IAL work with University of Bolton to launch MBA in Islamic Finance expired
- MGA Fiducia to provide businesses across the UK with the ability to protect their premises and staff against the threat of Nuclear, Biological, Chemical and Radiological(NBCR) terrorism expired
- Third Point Re and Sirius Group to combine expired
29th July 2020
InsurTech fundraising rebounds as $1.56bn invested in Q2 2020; four more ‘mega-rounds’ completed say latest Willis Towers Watson Briefing
Following the COVID-19-induced slowdown in global InsurTech investment during the first months of 2020, $1.56bn was raised by InsurTech firms in Q2. The total, up 71% over Q1, was driven in part by later-stage investments, including four ‘mega-rounds’ in excess of $100 million, according to the new Quarterly InsurTech Briefing from Willis Towers Watson.
At 74, deal count was down 23% from Q1, but many individual rounds were larger as investors continued to turn away from Seed and Angel deals in favour of support for more mature ventures. P&C sector investments predominated, accounting for 68% of funding, but the share of L&H sector investments was up 17 points to 32%, as the pandemic crisis continues to compound the value of technology, and particularly telehealth, in the segment. Also notable was the initial public offering of Lemonade and the acquisition of two incumbent insurance companies by InsurTechs, Hippo and Buckle.
Deals were struck in a record-breaking 25 countries, including newcomers such as Taiwan, Croatia, and Hungary. Seed and Series A financing hit a record low, at just 42% of deals. Series A deals were flat, but Series C deals accounted for 11% of deals, up from 6% the previous quarter. Distribution-focused start-ups saw an 11-point rise in deal share, while B2B companies reduced their share by nine points. New (re)insurer partnerships reached a record high of 34 deals, up four from Q1 2020.
Dr Andrew Johnston, global head of InsurTech at Willis Re, comments “While InsurTech investment clearly rebounded in Q2, and the trend towards greater commitments to later-stage fundraisings continues, we should be cautious and not read too much into the general state of the global InsurTech market based on this quarter alone. In the short term, investment confidence will test the status quo, especially for highly leveraged InsurTechs. Similarly, certain risks and their associated vectors have changed fundamentally and so the impact of that is yet to be truly felt. It is quite possible that we will observe a general slowing down of InsurTech activity as a result.
In the medium term, changing risk classes may be better understood alongside rising consumer optimism, but the true economic impact of COVID-19 probably won’t unfold until 2021 and 2022. This will undoubtedly impact many (re)insurers’ appetite to invest in or deploy technology. Survival may be a challenge for some InsurTechs, especially if their use-case has been lost forever due to underlying societal change following the lockdown. Equally, such changes will create opportunities for others. If the funding gap between Seed and later stages continues to widen then many InsurTechs will struggle to acquire the funds required for maturing growth.”
The latest Briefing, which focuses on InsurTech for property risks, opens with a detailed exploration of the segment. The Briefing includes case studies of the property-focused InsurTechs Openly, a managing general agent writing homeowners and landlord products; handdii, a digital platform for property insurance claims; Arturo, which delivers structured data observations and predictions for property insurers; Hometree, which provides home cover contracts to insureds; and Insurdata, which offers high-resolution exposure data in real time.
The issue also explores Structure Insurance Score, developed by Willis Towers Watson and e2Value to capture data used in determining replacement costs; the $123m fundraising by the title insurance and escrow service States Title, which took its valuation to $623m; and the acquisition by homeowners insurer Hippo of Spinnaker Insurance Company, which gives the unicorn InsurTech insurance licences in 50 US states.
The Briefing includes discussions with Kyle Beatty, an InsurTech investor and principal at American Family Ventures; and also a discussion with the founders of TypTap, a B2C InsurTech focused on homeowners and particularly flood risk. The issue also carries an article by Desmond Carroll, evp and head of Catastrophe R&D, Willis Re North America, on technology for property catastrophe insurance.
Carroll said “The chief technologies for catastrophe risk modelling have evolved little in terms of process since the inception of the science, despite much-expanded use of model outputs. That is set to change. The combination of machine learning and big data holds real potential to disrupt traditional cat modelling methodologies, for example through the mass analysis of satellite data to better understand catastrophic weather events. That’s just one way that InsurTech will ultimately revolutionise the property branch of the risk transfer business.”
Willis Towers Watson Trends(244 articles)