KPMG International, a global network of professional firms providing audit, tax and advisory services, has released its latest Pulse of Fintech report, which revealed that, over the past year, on a global level, there were 13 insurtech deals over US$100 million. However, overall, the global value of the insurtech market actually fell between 2017 and 2018, with $5.7 billion in private investment, compared with $10.3 billion the previous year.
The Pulse of Fintech is a ‘biannual report highlighting key activities and trends within the fintech market globally and in key regions around the world’. The report notes that despite this decrease, $5.7 billion is still ‘easily the third-highest annual total ever’. Will Pritchett, Global Lead of Insurtech, KPMG International, commented on the trend: “AI and machine learning are incredibly important and are going to redefine insurance in the coming years. But it’s still very early days. It will be almost impossible to really drive AI value on anything more than the most basic of insurance products until you’ve dealt with some of your fundamentals — your data, your legacy systems and the way your products are constructed and serviced.”
The report stated: “The focus of many insurtechs also shifted to platform-based models, with companies looking for ways to plug into different distribution networks or payments systems, work with different insurers, or offer white-label products and services.”
Last year saw a shift in the way that insurtech companies viewed data, recognising that it plays a crucial role in creating and selling on-demand insurance products. As a result of this, many insurance companies revamped their data management strategies in order to enhance consumer trust, thus encouraging consumers to share more of the personal data that is vital to appropriately tailoring products and services to individual needs.
Despite the global decrease highlighted in the report, insurtech investment grew substantially within isolated markets. Within the US, many companies ‘held sizeable funding rounds’: healthcare-related insurtech was a big winner throughout the year, led by two raises by Oscar Heath totalling $540 million, and a $300 million raise by Devoted Health.
The report also predicted that Asia will likely see substantial growth in insurtech investments in 2019 – partly from US and Europe-based traditional insurers who are looking to use Asia as a means of testing alternative insurance offerings.
Furthermore, growth in terms of partnerships increased in 2018, and will likely continue into 2019.
Meital Raviv, Director, Head of Fintech & Innovation, Financial Services for KPMG Israel, said: “Collaborative opportunities are driving a lot of interest in areas like insurtech right now. We’re seeing very different companies working together to create new business models and value propositions — such as insurance companies and automobile companies sharing data on their customers and then developing insurance programmes based on that data. This trend is only going to continue moving forward.”
For the full report, click here.