The quarterly global insurtech funding trend has been slashed by more than 50%, a likely victim of the COVID-19 pandemic, according to a new report from Willis Towers Watson. However, despite the “clear impact” of the outbreak on insurtech investment worldwide, insurtechs raised a total of US$912 billion during the first quarter.
Deal count for Q1 was at 96, up 28% from Q4 2019, according to Willis Towers Watson’s Quarterly InsurTech Briefing. Year over year, deal count in Q1 was up 10%. It was the highest number of investment rounds by transactional volume ever recorded by the Quarterly InsurTech Briefing.
However, overall funding was down by 54%, a drop driven largely by far fewer “mega-deals” – deals of US$100 million or more – taking place so far this year. In 2019, multiple unicorn-making rounds supported eight of the 10 insurtech firms valued at more than US$1 billion – giving five of them unicorn status in the process, according to Willis Towers Watson. Q1 2020, however, included no unicorn-making rounds and only one mega-round – the US$100 million Series D issue by PolicyGenius.
The US recorded 57% of deals, while the UK recorded 10%, according to Willis Towers Watson. Deal flow in Asia was down, but the Czech Republic posted its first ever public insurtech deal.
Seed and Series A financing fell 9% from the previous quarter at US$223 million, but early-stage deal count rose three percentage points to 51% of all deals. As a percentage of all funding, early-stage deal investment rose 12 percentage points.
Insurtechs focused on property and casualty insurance increased their share of total funding to 83%, the largest gap with life and health funding since Q3 of 2016. B2B-focused companies accounted for 55% of recorded deals in Q1, a 121% increase from Q4 2019, Willis Towers Watson reported. The value of strategic investments by reinsurers fell 8% from Q4 2019 and 43% from its peak in Q3 2019.
“This has been a particularly interesting quarter for global insurtech,” said Dr. Andrew Johnson, global head of insurtech at Willis Re. “It is clear that COVID-19 has had a material impact on later-stage investments, 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 reinsurer participation in this round would explain why we have seen fewer mega-deals, affecting the overall amount raised significantly, which is not surprising as reinsurers increasingly participate in later stages. Again, COVID-19 is a likely culprit for less engagement from industry capital as reinsurers focus their attention on other, perhaps more pressing issues.”