Insurtech continues to catch the eye of investors, with capital invested in insurtech start-ups surpassing the US$10 billion mark for the first time in any one year on record, according to the latest Willis Towers Watson (WTW) Quarterly Insurtech Briefing, covering the third quarter of 2021 (Q3 2021).
During the first three quarters of the year, global investment into insurtech reached US$10.5 billion. With three months left to go, 2021 is now only US$12 million short of the entirety of what was invested into insurtechs globally in 2018 and 2019 combined, according to the report.
Q3 2021 saw 113 deals yield more than US$3.1 billion in investment, a 23% increase over Q3 2020, making the latest figure the second-largest funding quarter on record.
The number of deals was up only 9% year-on-year, with two of the three largest deals being with cyber-related insurtechs: Coalition (US$205 million) and At-Bay (US$185 million). Meanwhile, the number of mega-rounds of $100+ million reached 11 and accounted for more than half of total funding (down from nearly 70% in Q2, 2021, a quarter that broke nearly every record).
Dr Andrew Johnston, global head of insurtech at Willis Re, said the continuous growth of insurtech funding does not mean venture and growth capital are available to all insurtechs.
“The growth of global insurtech investment over the past decade has been significant, but the stark pattern is a concentration of the much for the few,” Johnston said. “For example, in the second quarter, more than two-thirds of the total capital raised went into 15 deals. Roughly 0.5% of the world's insurtechs shared $3.3 billion, while $1.5 billion was distributed between another 147. Funding was zero for the remaining 95%.”
The report also explored insurtechs focusing on future risks and outlined how they attempt to deliver innovations that ultimately lead to better insurance outcomes.
Julian Roberts, managing director, alternative risk transfer solutions at WTW, who considers the future of risk management, said the interdependence of risk is now greater than ever – emphasising that nearly every link in every supply chain is reliant on functioning technology and connectivity.
“It's both an emerging risk and a powerful solution,” Roberts added. “Enhanced data enabled by technology provides effective new risk insights and paves the way for boundless new creativity in insurance solutions.”