The total transaction volume of insurance technology (insurtech) mergers and acquisitions (M&A) ballooned to US$460 million in 2017, more than three times the previous year’s level.
This was revealed by the fourth quarterly insurtech briefing from Willis Towers Watson, which outlined that industry incumbents and new entrants to the sector pushed it towards increased digitalisation.
The research, which was produced by Willis Towers Watson Securities and Willis Re, in collaboration with CB Insights, shows that insurtech transactions focused on digital distribution, consumer models and data analytics. Claims management and other back-end processing applications were also among the top-ranking priorities, with re/insurers seeking to improve efficiency and engagement throughout the value chain.
Hugely populated emerging markets China and India were the main drivers of insurtech M&A last year, accounting for 73% of transactions. Meanwhile, Singapore, Hong Kong, and other Asian markets combined for the remaining 27% of deals – a huge leap from the 4% they contributed in 2015.
“As companies seek insurtech transactions to tap new technologies, they are looking mostly to Asia, and in particular to Hong Kong and Singapore, amid low growth and even lower interest rates in the US and European economies,” said Kevin Angelini, head of strategy for Willis Towers Watson’s Asia-Pacific insurance consulting and technology business.
“Hong Kong and Singapore have well-regulated free markets, mature insurance customers, and access to international capital markets. These make it easier for investors to integrate resources.”
Both Hong Kong and Singapore are angling to become the region’s top fintech and insurtech hub. Last year, the Hong Kong Insurance Authority launched an insurtech sandbox for conducting pilot trials, as well as a fast track for licensing new online-only insurers.
In February, the Monetary Authority of Singapore announced its plans to form the ASEAN InsurTech LaunchPad which seeks to bring in insurtech firms to Singapore and help bridge insurers and start-ups.
Asian insurtech deals have helped boost the global figure to a record-high for 2017. In the fourth quarter of 2017 alone, re/insurers made 35 private technology investments globally, increasing the yearly total to 120.