Insurtech investment falls amid Covid-19 pandemic

Insurtech funding fell more than 50% during Q1 2020, as the Covid-19 pandemic continues to exert significant downward economic pressure across the globe.

Willis Towers Watson reported a 54% drop in insurtech funding during the first three months of 2020.

The firm said insurtechs managed to raise $912 million from 96 deals, representing an increase over the previous quarter. But Q1 2020 lacked the unicorn-making rounds of 2019, with only PolicyGenius raising as much as $100 million through a series D programme.

Dr Andrew Johnston, global head of insurtech at Willis Re, explained the results: “This has been a particularly interesting quarter for global insurtech. It is clear that Covid-19 has had a material impact on later-stage investments, and (re)insurers (insurance and reinsurers) are holding back.”

“Despite the very large percentage drop this quarter when compared with the last, we are still seeing a huge amount of activity in early-stage funding rounds, across a very large number of deals.”

“The relative downturn of (re)insurer participation in this round would explain why we have seen fewer megadeals, affecting the overall amount raised significantly, which is not surprising as (re)insurers increasingly participate in later stages. Again, Covid-19 is a likely culprit for less engagement from industry capital as (re)insurers focus their attention on other, perhaps more pressing issues.”

‘More bang for the buck than product proliferation’

The latest briefing from Willis Towers Watson also includes an article on technology in the motor sector by Stephen Jones, UK property and casualty insurance lead in the firm’s insurance consulting and technology business.

Previewing the article, Jones said: “Motor insurers’ focus on deploying emerging technologies has and will continue to be on operational efficiencies and customer experience across the various policy life stages, while seeking competitive advantage in areas of excellence very specific to insurance. Genuinely new product forms enabled by technology, on the other hand, will logically be focused on new and existing niches. The opportunities for insurers to use technology to enhance products and reduce costs are significant. Among incumbent insurers, reducing costs typically offers more bang for the buck than product proliferation.”

Mark Dugdale