How much more money can pour into insurtech start-ups, incubators, innovation centres, apps and software platforms? Hard to say, as there’s no sign of the gravy train ending anytime soon, according to recent data from Willis Towers Watson. Total new worldwide funding commitments to the InsurTech sector in 2019 were US$6.37 billion, 33.9% of the historical total, following a record-breaking $1.99 billion of investment in 75 projects during Q4 2019, according to the new Quarterly InsurTech Briefing from Willis Towers Watson, a leading global advisory, broking and solutions company (NASDAQ: WLTW).
During the year, eight “unicorn making” rounds of investment took place, creating five new unicorns (privately held start-ups valued at over $1 billion), of only 10 InsurTechs globally that have reached this threshold. 2019 also saw a 90% jump in investment rounds that exceeded $40 million.
In the UK Zego bagged $42 million in 2019, Cuvva secured £15m in Series A funding and Wrisk raised an extra £978,000 in the summer of 2019. Life insurance innovator Dead Happy, who are pioneering `Death Wishes’ as a core part of its offer, also raised £4.5m in funding in October 2019. In an interview with Insurance Edge Dead Happy founder Phil Zeidler described how the start-up aims to make life cover all about a lasting legacy, leaving something behind that defines you as a person – rather than simply providing a cash sum for your family or a funeral.
In Q4 2019, InsurTechs raised $244 million in early stage funding. P&C start-ups continued to take a greater share of total InsurTech investment than their life and health counterparts, continuing a trend seen since Q3 2016. Early stage funding to P&C companies grew to 69%, up slightly compared with 2019 Q3. Distribution- and MGA-focussed InsurTechs accounted for 57% of all deals by number.
Dr Andrew Johnston, global head of InsurTech at Willis Re, said: “2019 was the year when individual 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.
For example, UK-based Concirrus is now clearly the forerunner in behavioural-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. 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.”
The latest briefing concludes a year-long review of the ‘functional chain,’ with claims and settlement as the topic in focus. It includes detailed discussions of 10 InsurTechs: Metromile, Benekiva, ClaimVantage, Claimspace, Claim Central, DeepFraud, Global Parametrics, Adjoint, Banqu, and Spixii. The briefing also includes a discussion with Larry Calhoun and Roman Buegler of Munich Re about the reinsurer’s remote industries natural catastrophe claims assessment system; an examination of 2019’s seismic fundraising rounds by InsurTechs focussed on global life and health service provision; and thought leadership from Tom Helm, head of Claims Consulting at Willis Towers Watson’s Insurance Consulting and Technology business, on end-to-end claims technologies.
Helm said: “Although the very simplest common claims, such as automobile windscreen, may already be handled entirely by automated systems at some insurers; end-to-end automation can never work in all scenarios, even in consumer lines. Some aspects of the claims process require complex human judgement or investigation, and other cases, such as the need to empathise with a customer who needs support, demand the human touch. This means that claims handlers will remain in the driving seat.
It is essential that automated mechanisms are able to identify when a situation needs human intervention, making effective management of the interaction between handler and machine a critical consideration.”
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