Setting a Record
Willis Towers Watson reports insurtech funding volume increased 25% in fourth quarter 2019 compared to the same period in 2018.
- David Pilla
- March 2020
Insurtech funding worldwide in the fourth quarter of 2019 reached $1.99 billion, a new record as 75 projects attracted investment in the quarter, according to Willis Towers Watson.
This was a 10% decrease in the number of deals but a 32% increase in funding total from the third quarter, WTW and its affiliate Willis Re said in a quarterly insurtech briefing.
The report said the growth was driven by four mega-rounds (over US$100 million) benefiting Bright Health, Next Insurance, Duck Creek Technologies and WeFox Group, and an additional seven deals over $40 million.
Compared with the fourth quarter of 2018, the deal count in the 2019 quarter rose 17%, and funding volume increased 25%.
In the fourth quarter, the rest of the world “marginally outpaced the U.S., receiving 51% of all investment,” the report said. “The 49% of deals that took place in the U.S. marks a four-percentage-point increase from Q3 2019.”
WTW said the United States is still the dominant insurtech market, responsible for 54% of all deals and 67% of all funding since 2012.
“Insurtechs have, however, faced increased competition for funding as foreign competition continues to ramp up,” the report said. “China, Germany, the U.K. and France each have 4% or more of deal volume in Q4 2019.”
WTW noted Myanmar received its first public deal since the insurtech publication started recording, with an investment into KBZ MS by Mitsui Sumitomo Insurance.
“Russia also received its first public deal this quarter,” the report said.
In 2019, “insurtechs began to come to the fore to lead in specific parts of the market, whether in certain lines of business or in the use of particular technologies.”
In 2019, “insurtechs began to come to the fore to lead in specific parts of the market, whether in certain lines of business or in the use of particular technologies,” said Andrew Johnston, global head of insurtech at Willis Re, in a statement. Johnston said U.K.-based Concirrus for example, “is now clearly the forerunner in behavioral-based analytics for the specialty markets.”
“But while insurtech news is awash with the huge valuations and postulations of the art of the possible, there is also a very real story that is not so positive—individual insurtech cessations,” said Johnston. “The number is very difficult to calculate, but our data indicates that during the past three years, approximately 184 funded insurtechs might have closed their doors.”
Distribution and managing general agents represented 57% of deals in the fourth quarter, WTW said.
“Since 2014, distribution and MGAs have represented over half of all insurtech deals globally,” the report said. “B2B companies represented approximately 39% of deals, and less than 7% were full-stack insurers. However, in this latest quarter, we see a slight uptick in deals involving fullstack insurers to 10.7% with B2B deals falling to 32%.”
Of total insurtech investments since 2012 by deal count, the United States still dominates with 706, but the the next four countries have “participated significantly,” the report said. The United Kingdom has had 118 investment rounds, followed by China with 89, Germany with 59 and India with 47.
Total new worldwide funding commitments to insurtech in 2019 were $6.35 billion, said WTW. The broker's report breaks that total down to $3.52 billion for property/casualty and $2.83 billion for life/health insurtechs.
For the year, early-stage rounds recorded an 8% increase in deals but an 11% decrease in funding, compared with 2018, WTW said. “Mid-stage funding rounds saw a 61% increase in the number of deals and a 57% increase in funding. Late-stage rounds saw a 47% deal increase and a 226% increase in the amount of funding.
Of the 10 insurtech unicorns—privately held insurtech start-ups valued at over $1 billion—five were created in 2019: Wefox, Lemonade, Hippo, Next and Bright Health, said WTW.