The billions invested in property-casualty InsurTechs last year is a sign that this sector of the industry will continue to grow, especially in the post-COVID-19 world.
InsurTech funding reached a record high of $7.1 billion in 2020, with $4.7 billion earmarked for property-casualty start-ups, according to the latest InsurTech quarterly briefings from Willis Towers Watson and CB Insights.
2020 has been “the most important year for InsurTechs to date," said Dr. Andrew Johnston, global head of InsurTech at Willis Re, in a foreword to the report. Yet, “while COVID-19 has created a platform for InsurTechs to shine, it has also created a temporary environment that has made access to funding difficult."
“While our industry is facing extreme issues relating to COVID-19, we also have an unprecedented level of access to technology and technologists who can help it prevail during these times of instability," Johnston said. “Many InsurTechs probably feel vindicated that the insurance industry has been forced to recognize the value of technology."
Annual InsurTech funding reached an all-time high in 2020 with a 12% increase in funding and a 20% increase in deals compared to 2019. Notably, out of the record high 377 deals in 2020, 103 came in the fourth quarter, where p-c InsurTechs accounted for 67% of the quarter's $2.1 billion total and 73% of all deals made.
A separate analysis of the report by CB Insights noted that homeowners insurance InsurTechs continued to attract substantial investment in the final quarter. Hippo, a direct-to-consumer home insurance company, raised $350 million, and Paris-based Luko, another direct-to-consumer homeowners insurance player, raised a notable $60 million.
Life-health startups also finished the year strong despite being overshadowed by the p-c InsurTechs. While accounting for only 27% of deals in the final quarter, l-h InsurTechs accounted for 50% of later-stage mega-round deals in the last two quarters.
InsurTech activity in the independent agency space in 2021 got off to a strong start when Applied Systems announced they entered into a definitive agreement to acquire EZLynx and Bold Penguin announced they had been acquired by American Family.
Overall, the $4.7 billion invested in p-c InsurTechs last year is a sign that this sector of the industry will continue to grow, especially in the post-COVID-19 world.
Jan Alex is an IA contributing reporter.
