According to the latest Quarterly InsurTech Briefing from reinsurance broker Willis Towers Watson (Willis), the number of insurtech deals in the US reached a record high in the first quarter of this year. Sixty-six insurtech investment deals were secured during Q1, with transaction sizes continuing their consistent increase and new ‘hybrid’ investment funds, according to the broker, ‘blurring the line’ between funding by incumbent reinsurers and traditional venture capital.
Seven investment rounds worth $30 million or more were completed over the course of Q1, with investors taking larger and larger leaps on selected disruptors. According to the Willis briefing, incumbent insurers seem to prefer minority investments in startups that are developing technology that said incumbents can use to ease commercial pressure points (such as distribution costs and claims handling), with the achievement of a large investment return seen generally as a secondary priority. More traditional venture capitalist investors, meanwhile, are more likely to favour insurtechs that address customer pressure points (such as price and ease of access), tending to be product focused rather than process focused. They are also much more driven by a desire for return on investment.
“For insurtech startups, the funding scene is more complex, and finding the right investment partner has become more difficult,” said Rafal Walkiewicz, CEO of Willis Towers Watson Securities. “Hybrid models will continue to evolve, and may be the ultimate answer for insurtech entrepreneurs looking to balance industry expertise and the traditional [venture capitalist] value-creation mentality.”