InsurTech continue to attract significant investor cash, pulling in a near-record $5.3 billion for the 2021 third quarter, representing a total of 472 deals. Interestingly, U.S. companies nailed down most of the cash, according to a new Forrester report.
Approximately 70 percent of Q3 venture capital and other investments went to U.S.-based companies.
InsurTech funding levels for the sector are approaching record territory so far this year. As of Q3, new financings surpassed $15 billion, more than 2019 and 2020 combined. It came in at a record $6.5 billion in Q1 2021, and almost $3.8 billion in Q2.
According to Forrester, those 472 funding rounds came from 296 investors. Half of the funding went to “enablers” – companies that promote operational improvement. The other half targeted disruptor InsurTechs such as digital insurers and comparison marketplaces. This is a reversal from past periods where disruptors drew the bulk of financings.
Median funding raised hovered around $20 million and at least 12 deals were at $100 million or more.
Here are other highlights from the report:
- Most of the funding went to early-stage startup but the two largest transactions were private investment in public equity (PIPE transactions), with employee benefits platform Alight raising $1.6 billion and digital home insurer Hippo pulling in $550 million as part of its reverse merger transaction.
- Other major transactions during the quarter include Coalition ($205 million), Envelop Risk ($130 million), and Marshmallow ($85 million).
- Of the funding total, employee benefits platforms drew the most at $1.65 billion due to the Alight financing. Life, home and property/casualty insurance startups raised $867 million (the bulk of which went to Hippo), and enterprise/commercial insurance raised $718 million, $205 million of which went to Coalition. Insurance comparison/market place startups pulled in $542 million in financing (of which $216 million went to Digit insurance), and insurance user acquisition startups raised $350 million ($210 million of which went to bolttech).
- A number of established carriers invested in InsurTechs during the quarter, including HSCM Bermuda, Munich Re Ventures, SCOR, MassMutual, Nationwide, Sompo Holdings, Farmers, State Auto and The Hartford.
- There were 12 InsurTech acquisitions during the quarter, with six involving digital insurers, and three each for comparison marketplaces/startups enabling operational improvement.
The full report is Forrester’s “InsurTech Fuding Roundup, Q3 2021.”