A robust supply of capital combined with a growing number of new investors is driving record investments in the insurance technology sector.
The financing of insurance companies continues to grow, with many technology companies favoring partnerships with established insurance companies and brokers compared to the previous trend. of new entrants who want to act as disruptive, observers say.
In addition, the covid-19 pandemic has stimulated change and investment.
Thomas Mason, senior research analyst in Charlottesville, Virginia, for S&P Global Market Intelligence, a division S&P Global Inc., said that the insurance sector is an attractive option for investors.
"There is a lot of private venture capital floating around in the system and it has to go to work somewhere," he said.
"There is no shortage of capital looking for a home in the insurance industry," said Andrew Johnston, Nashville, Tennessee-based Global Head of Insurance Technology at Willis Re, a unit within the Willis Towers Watson PLC. In addition to established insurtech investors, the sector continues to attract a growing number of new investors, he said.
According to Willis Towers Watson's data, in 201
"There are a growing number of non-traditional investors looking at insurtech every year," says Johnston. "There are more and more non-industrial investors who see this space as an opportunity. "
Venture capitalists have increasingly moved into the insurance technology sector, according to Marie Carr, rector of global growth strategy and US financial services in Chicago at PricewaterhouseCoopers LLP." The nature of supply leads to that certain other types of players come to the table in greater numbers, "she said.
Venture capital financing g for US insurance companies increased to $ 1.97 billion in the first half of this year compared to $ 1.75 billion. during the same period in 2020, according to a recent report by S&P Global Market Intelligence.
Investors are also drawn to the initial stages of insurtech development.
"Investors see the potential in digitally transforming the insurance sector," said Jeffery Williams, senior analyst at Forrester Research Inc. in Richmond, Virginia, as digital maturity across the broader sector is beginning.
"We are still at the beginning of market penetration," said Emmalyn Shaw, managing partner. with Flourish Ventures, a venture capital firm with interests including insurtech and data and analytics, in San Francisco. "A combination of the overall market potential for transformation and the existing interest on a strategic basis for new insurtech innovation is what continues to drive interest."
Two recent reports show that 2021 will see record-breaking insurtech investments, with the bulk
Third-quarter insurance investment reached $ 3.13 billion, down from $ 4.82 billion in the second quarter but up from $ 2.54 billion in the third quarter of 2020, according to Willis Towers Watson
Year- So far, investment in insurance technology through September has peaked at $ 10 billion for the first time in a year, with 2021 already $ 10.5 billion raised, Willis said.
A report from Forrester said that about 70 % of the third quarter of 2021 Insurtech financing, or $ 3.77 billion, went to US-based insurance companies, followed by the UK for $ 330 million and India for $ 259 million. ding, it has to some extent abolished its "disruptor" label.
"Suppliers see value in cooperating with insurance companies, and incumbents are investing in insurtech as a result," said Mr. Williams and noted that among insurtech investors during the quarter were well-known names, including Munich Re Ventures, part of Munich Reinsurance Co., and Japan's Sompo Holdings Inc.
The Covid-19 pandemic also helped stimulate insurance investment as shutdowns created the need to do business remotely, which was facilitated by increased use of technology.
“Things that many leaders felt quite comfortable with were within the 15-year horizon or better, suddenly accelerated to a five- to seven-year horizon. The pace at which insurance companies must incorporate and build new opportunities has changed dramatically, "said Carr.
" The rapid digital adoption driven by covid will continue during the recovery. Insurtech was one of many sectors that directly benefited from such a transformation, "said Shaw, adding that COVID-19 has reinforced both insurers 'and reinsurers' 'sense of urgency' to become more deeply invested in technology.
" The change insurance that goes through is here to stay. Insurtech investments are here to stay, ”said Carr. "People will not go back to manually anymore."