Quarterly global InsurTech fundraising trend slashed by over 50%, COVID-19 a likely culprit; $900+ million invested in Q1 2020 on increased deal flow

LONDON, May 04, 2020 (GLOBE NEWSWIRE) -- Despite the clear impact of COVID-19 on InsurTech investment worldwide during Q1 (which saw almost the same amount of money raised in its first three days as was then subsequently raised in its final three weeks), InsurTechs raised a total of US$912 million during the first three months of 2020, according to the new from Willis Towers Watson, a leading global advisory, broking and solutions company (NASDAQ: WLTW).

Deal count, at 96, was up 28% over Q4 2019, 10% more than the first quarter of that year. It is the highest number of investment rounds by transactional volume ever recorded by the Quarterly InsurTech Briefing. Overall total funding was down by 54%, however, reflecting in part far fewer ‘mega-deals’ (US$100 million-plus deals) taking place in the year so far. In 2019, multiple unicorn-making rounds supported eight out of the ten InsurTech firms valued at over a billion US$ (giving five of them unicorn status in the process). This most recent quarter, however, included no unicorn making rounds and only observed one mega-round — the US$100 million Series D issue by PolicyGenius.

The US recorded 57% of deals, and the UK recorded 10%. Deal flow in Asia declined, but the Czech Republic recorded its first-ever public InsurTech deal. Seed and Series A financing was down 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 was up 12 percentage points. InsurTechs focused on property and casualty (P&C) insurance increased their share of total funding to 83%, the largest gap with life and health funding since Q3 2016. B2B-focused companies accounted for 55% of recorded deals in Q1 2020, a 121% increase from Q4 2019. The value of strategic investments by (re)insurers fell 8% from Q4 2019 and 43% from its highest point, reached in Q3 2019.

Dr. Andrew Johnston, global head of InsurTech at Willis Re, said: “This has been a particularly interesting quarter for global InsurTech. It is clear that COVID-19 has had a material impact on later-stage investments, and (re)insurers 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 (re)insurer participation in this round would explain why we have seen fewer megadeals, affecting the overall amount raised significantly, which is not surprising as (re)insurers increasingly participate in later stages. Again, COVID-19 is a likely culprit for less engagement from industry capital as (re)insurers focus their attention on other, perhaps more pressing issues.”

The latest Quarterly InsurTech Briefing opens with Johnston’s review of the previous decade of InsurTech, followed by predictions for the next decade, and then finally a focus on InsurTech for the auto and motor vehicle insurance sector, in the first of the year’s deep dives into the InsurTech phenomenon in specific classes of business. It includes detailed discussions of three auto-focussed InsurTechs: Buckle, which provides insurance services to gig economy workers; By Miles, which offers real-time, pay-as-you-go car insurance; and OCTO, a telematics and data analysis provider. The quarterly also spotlights Concirrus, a specialty-lines InsurTech focussed on behavioural analytics, after its funding raise this quarter, and Radar Live, the Willis Towers Watson point-of-quote rating and rules solution that integrates with its analytical software tools Emblem, Classifier, Radar Base and Radar Optimiser.

The briefing also includes a discussion with Matthew Jones, a principal at the venture investment platform Anthemis; another with the insurers Ping An and Zhong An about the development of the InsurTech industry in China; and an article on technology in the motor sector by Stephen Jones, UK P&C Insurance lead in the Willis Towers Watson Insurance Consulting and Technology business.

Stephen Jones said: “Motor insurers’ focus on deploying emerging technologies has and will continue to be on operational efficiencies and customer experience across the various policy life stages, while seeking competitive advantage in areas of excellence very specific to insurance. Genuinely new product forms enabled by technology, on the other hand, will logically be focused on new and existing niches. The opportunities for insurers to use technology to enhance products and reduce costs are significant. Among incumbent insurers, reducing costs typically offers more bang for the buck than product proliferation.”

Investor Matthew Jones said: “We believe there are opportunities to improve the industry in pretty much all lines of business, life and non-life, personal and commercial, and across the insurance value chain, from underwriting to distribution to asset management. We also believe that there is a maturing cohort of InsurTech companies worthy of investment. We, as investors, are enablers of innovation. Entrepreneurs are the real leaders. By and large, they acknowledge that insurance is complex, and they have gained a respect for the industry.”

View the full report .

About Willis Re

One of the world's leading reinsurance brokers, Willis Re is known for its world-class analytics capabilities, which it combines with its reinsurance expertise in a seamless, integrated offering that can help clients increase the value of their businesses. Willis Re serves the risk management and risk transfer needs of a diverse, global client base that includes all of the world's top insurance and reinsurance carriers as well as national catastrophe schemes in many countries around the world. The broker's global team of experts offers services and advice that can help clients make better reinsurance decisions and negotiate optimum terms. For more information, visit willistowerswatson.com/Solutions/reinsurance.

About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimise benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.

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