$ 10.5 billion global funding train Insurtech leaves many startups behind, advises WTW


While global investments in insurtechs continue to increase, not all insurtechs benefit. On the contrary, much of the funding is concentrated on a relatively small number of startups.

For example, in the second quarter, more than two-thirds of total capital raised went to 15 deals, according to Dr Andrew Johnston, Global Head of Insurtech at Willis Re.

“The continued escalation of insurtech funding does not mean that venture capital and growth capital are available for most or even many insurtechs. The growth in global insurtech investment over the past decade has been significant, but the austere trend is a concentration of many for a few, ”said Johnston, commenting on Willis Towers Watson’s latest InsurTech quarterly briefing.

Johnston said about 0.5% of the world’s insurtechs were split $ 3.3 billion, while $ 1.5 billion was split among 147 others. “Funding was zero for the remaining 95%,” he added.

“In general, the number and volume of transactions continue to increase steadily on a quarterly basis; however, this may be where the good news ends for the majority of insurance companies. If we scratch the numbers a little more, we see quite clearly that a significant amount of capital raised quarterly arrives at the door of a few, ”said the briefing.

The report finds cause for concern not only with the tendency for a relatively small number of them to get the bulk of the funding, but also with the tendency of some overvalued insurtechs to go public. Many insurtechs are looking for a large capital increase before going public to achieve unicorn status (a valuation of over $ 1 billion). According to Willis, there have been four insurtech unicorns created in 2018, five in 2019, five in 2020, and eight so far in 2021. So in total, there could be 24 insurtech unicorns currently.

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This latest analysis from Willis notes that many of the most popular insurtechs are venture companies. Meanwhile, several hundred distribution-focused and business-to-business (B2B) software insurtechs “are unlikely to achieve the kinds of high business valuations that their carrier-model insurtech cousins ​​command (for the moment) “.

The authors are concerned about this trend. “You can’t help but think that this current trend of overvalued companies going public might not be a blessing at all. Will some of these disappointing insurtechs ultimately jeopardize our big picture of technology as it continues to enter our industry? Will they be the heat that dries up the investment funds that should in fact be looking for a better home? Only time will tell, but one thing is for sure: the vast majority of insurtech companies are unlikely to receive the most of the dollars that dominates most insurtech news.

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Overall, global investment in the insurtech industry has reached new highs this year, with a record $ 10.5 billion raised in the first three quarters of the year, according to the report. With three months to go, 2021 is only $ 12 million less than the total invested in insurtechs around the world in 2018 and 2019 combined.

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The total number of transactions to date, 421, is also an annual record, according to the Willis Towers Watson report.

In the last quarter, 113 deals generated more than $ 3.1 billion in investments, an increase of 23% from the third quarter of 2020. It was the second largest funding quarter on record. . The number of deals grew only 9% year-on-year, but the number of mega-towers over $ 100 million reached 11 and accounted for more than half of total funding (up from nearly 70% in the second quarter of 2021, a quarter that broke almost all records). Two of the three biggest deals were with cybersecurity-related insurtechs: Coalition ($ 205 million) and At-Bay ($ 185 million).

Start-ups raised a record $ 630 million, while their average deal size reached nearly $ 12 million. However, the share of roundtables and angel investors fell dramatically, to just 19%, its lowest point since Q2 2020. Conversely, the number of Series A deals has almost doubled to reach 31% of agreements.

Analysis of the Q3 earnings report further shows that the number of mega-tours completed per quarter is generally on the rise. At the same time, each mega-tower deal represents a steadily declining percentage of total mega-tower activity, and the continuing trend is for more than 50% of quarterly funding to be focused on a handful of deals.

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The share of US-domiciled investment targets rebounded to nearly 46%, an increase of about seven points from the previous quarter, but countries like Indonesia, Sweden, South Africa , Singapore and the United Arab Emirates saw a quarterly increase in transaction activity. .

This quarterly insurtech briefing from Willis Towers Watson includes case studies of several insurtechs: OTONOMI, a blockchain-enabled parametric MGA in cargo space; Corvus, an MGA with an AI-driven approach to business risk; Arbol, a platform for parametric weather risk products; Stable, which provides price risk management tools for the food and agricultural sectors; Understory, a hyperlocal climate risk analysis platform; Concirrus, which uses IoT data and AI to design and price digital insurance products; Kettle, a reinsurance MGA who uses AI to assess risk, starting with the California wildfires; and Previsico, a flood modeller focusing on surface water flooding.

The briefing also includes discussions with Manny Citron of Volery Capital on the role of impact capital, Toby Behrman of Global Parametrics in new and underserved risk transfer markets; a look at the MGA commercial flood risk redesigned by technology; and chats with Brendan Smyth and Premal Gohil of Liberty Mutual about global innovations and partnerships and with Julian Roberts, Managing Director, Alternative Risk Transfer Solutions at Willis Towers Watson.

Source: Quarterly InsurTech Briefing from Willis Towers Watson

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InsurTech Tech Mergers Willis Towers Watson Startups