InsurTech funding volume hovered close to $1 billion in the 2017 second quarter, a result nearly 150 percent larger than the same period a year ago, according to a quarterly report on the sector from Willis Towers Watson and CB Insights.
That was a 248 percent jump from the 2017 first quarter and reflected a record 64 transactions, compared to $283 million and 38 transactions for InsurTech funding deals in the previous quarter. InsurTech funding in Q2 is also 148 percent higher than the $398 million in funding for 34 transactions in the 2016 second quarter, an 88 percent increase year-over-year, according to the report.
Why such a big jump? It turns out that funding volume soared due to the sheer increase in number of transactions, reflecting an escalating move toward InsurTech capabilities. A huge number of large capital intensive investments globally also drove the results higher, the report noted.
One of the bigger trends the numbers indicate is InsurTech financing continues to go global. The U.S. accounted for 65 percent of the transactions since 2012, but domestic transactions were just 45 percent of the total during the 2017 second quarter.
InsurTech funding is also going early stage. For Q2, early stage/seed/Series A financing hit a record $289 million in Q2, representing 63 percent of the total deals during that period.
Also worth noting is that well-established insurers and reinsurers are increasingly investing in the InsurTech upstarts increasingly dotting the corporate landscape.
Lemonade, for example, has investments from Allianz Ventures and XL Innovate. Net Insurance attracted investment money from Markel Ventures, Munich Re/HSB Ventures and Nationwide Ventures. Trov has Suncorp Group, Sompo Japan, and Munich Re on its investor roster.
A Greater Focus on Claims Technology
Other InsurTech financing trends from the report:
- 34 property/casualty InsurTech transactions during Q2 reflected a 48 percent hike from the 23 P/C deals in the 2017s first quarter. The number is also 89 percent higher than the 18 P/C deals in the 2016 Second quarter.
- There were 31 private technology investments by insurers and reinsurers during Q2, their highest to date. The results are 19 percent higher than the 26 investments in Q1 2017, and 1 percent larger than the 27 investments tallied in Q2 2016.
- Claims technology is becoming a new area of InsurTech financing focus for insurers and reinsurers. Among the investments in this space: Snapsheet closed a $12 million Series D round in June 2017. Business process outsourcing provider Genpact acquired BrightClaim in May 2017. Farmers partnered with HONK Technologies in June 2017.
Source: Willis Towers Watson, CB Insights