The financing of technology companies focusing on the insurance industry is likely to be robust this year and until 2022 when so-called insurtech companies mature, according to a recent report and other industry sources.
Although insurtech investments declined following the outbreak of the COVID-19 pandemic in March last year, recent examples of successful public fundraising and acquisitions of traditional insurance companies could encourage more business, they say.
Insurance-related technology startups "will still be able to secure the large amounts of financing required … given financing trends over the first nine months of 2020," S&P Global Inc. said in a report on the sector released last week. but both the value and volume of the transactions recovered in the following months, the report says. In a public offer or other transaction, the report says.
S&P sees that the active funding environment extends to 2022, according to the report's author, Thomas Mason, senior research analyst for S&P Global in Charlottesville, Virginia.
The stage of companies' maturity is more of a factor in their ability to attract resources than the part of the insurance industry in which they participate, he said.
"It seems like the company's vintage 201
Duck Creek Technologies Inc. CEO Mike Jackowski said the company's successful IPO in August, which raised more than $ 400 million, gave the software as a service provider greater market visibility and allows it. to make investments. Duck Creek & # 39 ;s stock jumped more than 50% from the $ 27 share price offer on the first day of trading. , managing partner at Brewer Lane Management LLC in Los Angeles. "These companies really impress people with their growth."
Lemonade reported $ 73.9 million in total revenue in the first nine months of 2020, compared to $ 43.8 million in the same period in 2019, according to the latest earnings report.  Root reported $ 295.9 million in total revenue in the first nine months of 2020, compared to $ 183.7 million the year before.
Mr. Mason of S&P Global said that the current low interest rate environment also encourages insurtech financing. "Low interest rates are a catalyst for venture capitalists seeking higher returns," he said.
The acquisition of insurtechs by established insurance companies also drives the sector's growth.
Most recently, American Family Insurance Mutual Holding Co. last week, online insurance exchange and technology company bought Bold Penguin Inc.
In November 2020, broker Brown & Brown Inc. acquired CoverHound Inc., a digital insurance market, and its wholly owned subsidiary CyberPolicy. In January 2020, Aon acquired PLC CoverWallet, a digital insurance platform for SMEs.