In total, worldwide funding commitments for insurtech hit $6.37 billion in 2019, comprising 33.9 per cent of historical totals. Over the course of the year, eight ‘unicorn-making’ investment rounds took place, resulting in five new privately held startups classed as unicorns (meaning the value of the company sits at over $1 billion). Only 10 insurtechs globally have reached this classification point. Additionally, according to Willis Towers Watson’s analysis, last year saw a jump of 90 per cent in the number of investment rounds exceeding $40 million.
“[Last year] 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,” commented Dr Andrew Johnston, Willis Re’s Global Head of Insurtech. “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.”
Looking more broadly at the future of the sector, Tom Helm, Head of Claims Consulting at Willis Towers Watson’s Insurance Consulting and Technology business, 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.”
While some have urged caution about the insurance industry putting all of its eggs in the insurtech basket – and admittedly a pragmatic approach never hurt anyone – these figures certainly seem to suggest that the sector is approaching, if not hegemonic, then definitely highly influential status. It remains to be seen if this growth is sustainable, but at present things are looking pretty sunny for the sector.