The country hosts approximately 280 businesses of this type, out of an estimated 3,000 worldwide – making London home to the same number of insurtech ‘unicorns’ as the rest of Europe combined. The figure also places it ‘second only to Silicon Valley’ in terms of overall number of insurtech developers.
While London dominates the UK insurtech sector, approximately a third (31 per cent) of UK firms are located outside of the city. McKinsey also applauded insurtechs for their work increasing diversity and inclusion in the insurance industry. Approximately 39 per cent of staff are non-British, while about two thirds are younger than 40.
McKinsey credited a ‘flourishing ecosystem of startups, investors, and incumbents’ with the strength of the UK insurtech industry. However, the company also noted that, despite this, UK insurtechs ‘have not been immune to the recent global tightening on valuations’.
The analysis continued: “The multiples of some of the most successful publicly listed insurtechs fell from 15 times those of traditional peers, to below the level of incumbent insurers, [while] private capital funding decreased 32 per cent compared with the peak in 2021.”
McKinsey noted that the sector was facing increased competition for investment from technology firms from outside the insurance sector, as well as the growing trend of Big Tech firms such as Amazon and Tesla entering into the insurance sector.
However, the analysis concluded that, despite this, ‘the UK insurtech sector has remained resilient, employing around 14,000 full-time-equivalent workers’, and estimated to bring in ‘£2–3 billion in revenue per year – though we calculate its full (direct and indirect) impact on UK gross domestic product (GDP) to be closer to £5 billion and 60,000 jobs’, McKinsey stated.
German insurtech Hepster announced that it has raised €10 million in Series B funding earlier this month.